Paxos, a prominent cryptocurrency firm, has openly accepted responsibility for an inadvertent transaction fee overpayment of approximately $500,000 in a Bitcoin (BTC) transfer that took place on September 10. The acknowledgment was made on Wednesday, ending conjecture about the identity of the party behind the costly error. Paxos clarified that the excess fee was the result of a bug affecting a solitary transfer, ensuring the safety of all customer funds, with the incident solely impacting their corporate operations.
The company’s official statement followed widespread rumors suggesting that PayPal (NASDAQ: PYPL) might have been involved in the transaction, primarily due to a related wallet account, identified by analytics platform OXT as belonging to PayPal. However, Paxos definitively confirmed that PayPal had no connection to the error.
Subsequent to the transaction, the Bitcoin mining pool F2Pool verified the block containing the transaction. The pool’s management made an offer to return the funds to the sender in case of a claim within a three-day window; otherwise, the excessive fee would be distributed among the pool’s hash power contributors.
The erroneous transaction was initially discovered shortly after its occurrence. Blockchain data revealed that the sender paid fees amounting to roughly 20 BTC (equivalent to over $515,000 at the time) to send a mere 0.07 BTC (valued at less than $2,000 at the time). Jameson Lopp, co-founder of the Casa wallet, suggested that the sending account appeared to belong to an exchange or payment processor with faulty software, as it had conducted over 60,000 transactions from the same address.
Presently, Paxos is in negotiations with F2Pool, the recipient of the overpaid fee, in an effort to recover the surplus amount. Paxos is primarily recognized as an issuer of stablecoins, including PayPal USD (PYUSD) and Pax Dollar (USDP), and also operates a crypto brokerage firm that facilitates Bitcoin transactions.
This incident is not the first of its kind where users or entities have incurred substantial fees due to errors. In 2019, an Ethereum user suffered a loss of over $300,000 after mistakenly entering values into the wrong fields. Another incident in 2020 saw an Ethereum user paying $9,500 for a $120 trade due to a similar mistake.
