$500,000 Bitcoin Fee Blunder: Paxos Revealed as Responsible Party

It has been revealed that the responsible party behind a $500,000 fee blunder on a recent Bitcoin transaction was Paxos, a US-based crypto service provider. 

This transaction, which occurred on September 10 at 5:10 PM UTC, involved a payment of only $200 worth of BTC but came with an astonishing transaction fee of around $500,000, setting a new record in Bitcoin transaction fees.

Paxos, a US-regulated company known for issuing stablecoins and providing various crypto-related services, has confirmed its involvement in this fee debacle. 

A spokesperson from Paxos admitted their mistake, saying:

“Paxos overpaid the BTC network fee on Sept. 10, 2023. This was due to a bug on a single transfer, and it has been fixed. Paxos is in contact with the miner to recoup the funds.”

said spokesperson.

The mining pool responsible for confirming the transaction block, F2Pool, initially offered to hold the fee for three days if the sender wanted to claim it back. 

Will put these 20 BTC on hold for now. To be redistributed to miners if nobody comes to claim it after three days. https://t.co/GsRUnAP9jQ

— Chun (@satofishi) September 11, 2023

However, the situation became complicated due to a disagreement over time zones. Chun Wang, co-founder of F2Pool, expressed his regret, stating:

“I was annoyed and regretted agreeing to refund that 20 BTC. Especially when I saw the person claiming it kept saying EST instead of EDT/UTC.”

Bitcoin community members have suggested various solutions, including simply refunding the 20 BTC to Paxos or distributing it to miners in the pool as a “hard lesson” for Paxos.

Paxos: A Respected Name in the Crypto Industry

Paxos, known for issuing stablecoins like PayPal USD and Pax Dollar (USDP), operates a crypto brokerage firm that handles Bitcoin transactions. 

While this fee blunder did not affect Paxos clients or end-users, it did highlight the potential consequences of a simple mistake in the crypto world.

Paxos is one of many entities to face such an issue in the crypto space. In the past, users and companies have mistakenly paid exorbitant fees due to errors. 

These incidents emphasize the importance of double-checking transactions before confirming them in cryptocurrencies.

Community’s Suggested Resolution

In the ongoing debate within the Bitcoin community, there are several proposed resolutions. 

https://twitter.com/satofishi/status/1702095123981738437

Some believe Paxos should simply be refunded the 20 BTC, as they have acknowledged their error and are taking steps to rectify it. 

This group argues that accidents can happen to anyone, and it’s important to show understanding.

On the other hand, there is a faction that suggests distributing the funds among the miners within F2Pool. 

This approach is seen as a way to ensure that Paxos learns a “hard lesson” and pays for their mistake. 

It also indirectly benefits the miners who contribute to the security and operation of the Bitcoin network.

As of now, the community remains divided on the best course of action, and the final decision will likely depend on the consensus reached by the involved parties.

In this case, Paxos has learned a valuable lesson about the importance of rigorous transaction verification, and the crypto community is closely watching how this situation gets resolved.

NB: Any Information provided is NOT FINANCIAL ADVICE. Do Your Research before making any Financial Decisions.