An account that mistakenly overpaid $500,000 in fees for a Bitcoin transfer on September 10th has been identified as belonging to Paxos, a well-known issuer of stablecoins. In a statement released on September 13th, Paxos clarified that the error was solely on their part and not the responsibility of PayPal, as some had speculated.
According to Paxos, the overpayment of fees did not impact end users, and all customer funds are safe. They explained that it was a result of a bug on a single transfer, which has since been fixed. Paxos is currently in contact with the miner to recoup the lost funds.
The mistaken transaction was discovered shortly after it occurred on September 10th. The sender of the transaction paid fees of approximately 20 BTC, equivalent to over $515,000 at the time, to transfer only 0.07 BTC, worth less than $2,000. Casa wallet co-founder Jameson Lopp pointed out that the sending account had made over 60,000 transactions from the same address, leading to speculation that it belonged to an exchange or payment processor with buggy software.
Bitcoin mining pool F2Pool confirmed the block that contained the transaction. They offered to return the funds to the sender if a claim was made within three days. Otherwise, the excessive fee would be distributed to the pool’s contributors.
Before Paxos clarified the situation, a Bitcoin enthusiast named Mononaut suggested on social media platform X (formerly Twitter) that PayPal was responsible for the transaction. Mononaut pointed out that the sending account behavior closely matched that of an inactive wallet labeled as “Paypal” by blockchain analytics platform OXT. However, Paxos’ statement contradicted this claim, stating that the error was their own and not attributed to PayPal.
Instances of users or companies inadvertently paying exorbitant fees are not unprecedented in the crypto space. In 2019, an Ethereum user lost over $300,000 due to pasting values into the wrong fields. Fortunately, the mining pool involved agreed to return 50% of the lost funds. Similarly, in 2020, another Ethereum user accidentally paid $9,500 in fees for a $120 trade, leading them to declare that it had “destroyed their life.”
Paxos’ statement reassured users that their funds were safe and affirmed their commitment to resolving the issue with the miner to recover the lost funds. As the situation unfolded, it became clear that the error was solely Paxos’ responsibility and not connected to PayPal, as some had suspected initially.
Instances like these serve as a reminder of the importance of double-checking transactions and ensuring accurate input of values to avoid substantial financial losses in the crypto world.