Paxos Overpaid $500,000 in Bitcoin Transaction Fees
Posted September 14, 2023 at 5:34 am EST.
Crypto Brokerage Paxos Seeks Refund After Paying $500,000 in Bitcoin Transaction Fees
Crypto brokerage Paxos appears to be seeking a refund after it accidentally paid half a million dollars worth of Bitcoin in transaction fees.
The transaction was initially flagged by Chun Wang, the founder of the mining company Stake.fish, which allows users to earn rewards in exchange for helping maintain blockchain networks.
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
At the time, Wang said he would redistribute the erroneous fee paid to miners if no one came forward to claim it after three days. At first, blockchain sleuths hypothesized that the wallet address behind the transaction might belong to PayPal after tracing its on-chain activity.
All evidence now points to a software bug like this as the cause of the error.
I really feel for the developer who wrote that code – it’s such an easy mistake to make, and it should have been caught in review.https://t.co/OPfQXZUyoT
— mononaut (@mononautical) September 13, 2023
However, Paxos claimed responsibility for the error shortly after, responding to several publications that published news articles about PayPal’s alleged error. Paxos issues PayPal’s U.S. dollar-pegged stablecoin PYUSD.
“Paxos overpaid the BTC network fee on Sept. 10, 2023. This only impacted Paxos corporate operations. Paxos clients and end users have not been affected and all customer funds are safe. 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,” a PayPal spokesperson said to Bitcoin Magazine.
Paxos also seems to have contacted the miners to initiate a refund, although the three-day time frame set out by Wang has elapsed.
In an X post on Thursday, Wang polled the community to decide the best course of action.
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.
So what should I do?
— Chun (@satofishi) September 13, 2023
At the time of writing, 28% of voters were in favor of returning 20 BTC to Paxos, 14% voted to give back half, 21% voted to freeze it, and the remaining majority of 36% were in favor of distributing it to miners.