A recent erroneous Bitcoin transaction that led to an inflated transaction fee of $510,000, nearly 480,000 times the average network fee of $2.176, traced back to Paxos, has been returned.
The company acknowledged its mistake, attributing the inflated fee to a bug in a single transfer that has now been rectified by F2Pool, the miner who received the overpayment.
According to on-chain data shared by Mempool on X,
“F2Pool have sent the 19.82108632 BTC fee overpayment back to Paxos.”
Paxos attempted to transfer a mere 0.074 BTC, valued at less than $2,000, on September 10, 2023. However, the resulting transaction fee was an astounding 19 BTC, equivalent to about $510,000. The discrepancy resulted in the highest transaction fee ever recorded on the Bitcoin network.
Jameson Lopp, the co-founder of CasaHODL, analyzed the incident and speculated that the error might have originated from an exchange or payment processor address software issue. Lopp noted that the address in question, which has handled more than 60,000 transactions, likely miscalculated the change output, leading to the inflated transaction fee.
The co-founder of F2Pool, Chun Wang, stated that the user could claim the overpaid fees within a three-day window. If unclaimed, the funds would be redistributed among miners— a decision aiming to address potential unclaimed fees equitably.
Paxos took responsibility for the error, confirming that the incident only affected the company’s corporate operations and reassured customers funds were safe. The company is currently working on recovering the fee through a Bitcoin miner.
Early speculation suggested PayPal’s involvement due to the digital wallet’s transaction behaviors, which resembled those of a defunct address previously associated with PayPal. However, a Paxos spokesperson declined to confirm or deny any relation to PayPal.
