The $500,000 Bitcoin Transaction: Who’s to Blame and Will the Funds be Returned?

Crypto Company Pays 20 BTC in Fees

A shocking error on the Bitcoin blockchain recently made headlines when it was discovered that a transaction fee of approximately 20 BTC, equivalent to around half a million dollars at the current BTC price, was paid to execute a transaction worth only 0.07 BTC (approximately $1,800).

F2Pool, one of the world’s largest mining pools, was the lucky recipient of this windfall, receiving a total of 20.013 BTC in transaction fees for block 807,058. Additionally, they also received the block reward of 6.25 BTC.

Initially, rumors circulated that the payment processor PayPal was behind this colossal mistake. On-chain analysts spread the news like wildfire on X, formerly known as Twitter, before a PayPal spokesperson clarified that the blockchain technology company Paxos was responsible for the transaction.

Paxos is the company behind PayPal’s stablecoin, PayPal USD (PYUSD). It used to be the issuer of Binance USD (BUSD) stablecoin until it came under scrutiny from the US Securities and Exchange Commission (SEC) earlier this year. Apart from PYUSD, Paxos also issues Pax Dollar (USDP) and operates its own cryptocurrency exchange.

According to a spokesperson from Paxos:

“On September 10, 2023, Paxos overpaid the BTC network fees. This only affected Paxos’ operations. Customers and end-users of Paxos were not affected, and all customer funds are secure. This was caused by a bug in a single transfer, which has been resolved. Paxos is in contact with the miner to retrieve the funds.”

Bitcoin Miners in Dilemma

When the bizarre error was discovered earlier this week, Chun Wang, the founder of F2Pool, announced on X that the 20 BTC was put on hold. Furthermore, a 3-day timeframe was given for the responsible party to come forward and return the funds.

In a subsequent message on X, Wang revealed that Paxos had allegedly failed to contact the mining pool in a timely manner. He also mentioned that Paxos blamed the time zone differences for the delay. Wang expressed regret for agreeing to return the stack of bitcoins.

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. Last time a Zcash guy did that, I blocked his entire company.

Ref:https://t.co/MQh0ijLR11https://t.co/lxtcFH9mq3

So what should I do?

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— Chun (@satofishi) September 13, 2023

A poll attached to the tweet showed that 35.8% of the 2,347 votes preferred distributing the funds to BTC miners.

Conclusion

In conclusion, a colossal mistake resulted in a tremendous transaction fee on the Bitcoin blockchain. F2Pool received the erroneously paid fee, and the responsible party, Paxos, has been in contact with the mining pool to retrieve the funds. There seems to be a disagreement between F2Pool’s founder and Paxos regarding the return of the bitcoins. The outcome remains uncertain as Bitcoin miners and the cryptocurrency community wait to see how this situation unfolds.