Cause of $500,000 Transaction Fee Error in Bitcoin Transfer Revealed!

• Paxos has taken responsibility for the recent $510,000 Bitcoin transaction fee, which was the highest fee ever paid in U.S. dollars for a single Bitcoin transaction.
• Typically, BTC network fees range from $1 to $5, occasionally reaching up to $50 when network activity is high, so the fee raised immediate eyebrows.
• Chun Wang, CEO and Founder of Stakefish, reported that the person behind the excessively paid BTC fee should come forward and claim their funds within three days.

A user paying a transaction fee of $510 thousand for Bitcoin transfer aroused great curiosity in the community; The person responsible for the transaction fee was revealed.

A User Paid 19 BTC for a Bitcoin Transfer

In a surprising turn of events, Paxos has accepted responsibility for the claim that it was behind the excessively high fee transaction of $500,000 in Bitcoin, for which PayPal had been accused.

Paxos, a New York-based blockchain infrastructure company that issues PayPal USD (PYUSD) and Paxos Dollar (USDP), recently took responsibility for the $510,000 Bitcoin transaction fee, the highest ever paid in U.S. dollars for a single Bitcoin transaction.

The story began when several blockchain experts noticed an unusually high Bitcoin network transaction fee of 19.89 BTC associated with a relatively small Bitcoin transfer (0.074 BTC). Typically, BTC network fees range from $1 to $5, occasionally reaching up to $50 when network activity is high, so the fee raised immediate eyebrows.

According to an analysis by Mononautical, a user on X (formerly Twitter), the entity behind the excessively paid Bitcoin fee was PayPal because the address associated with the transaction was similar to an address labeled as PayPal on OXT, a mobile block explorer for Bitcoin. Following these rumors, Paxos denied this statement, explaining that it was untrue.

Paxos stated that the substantial BTC fee occurred due to a bug in the Bitcoin transfer. However, the blockchain infrastructure company has started making plans to reimburse the lost funds from BTC miners involved in the transfer. Paxos stated:

“We accidentally paid the BTC network fee on September 10, 2023. This only affected Paxos’ corporate transactions. Paxos customers and end-users were not affected, and all customer funds are safe.”

Bitcoin Miners Considering Refund

Currently, Bitcoin miners are contemplating whether to refund the significant Bitcoin network fee paid by Paxos for the 0.074 BTC transfer. The mining company involved in the transfer, Stakefish, is a leading validator for proof-of-stake blockchains.

Chun Wang, CEO and Founder of Stakefish, mentioned that the person behind the overpaid BTC fee transaction should come forward and claim their funds within three days. A claim was made three days later, but Wang wasn’t sure if he should refund the Bitcoin fee funds. Some members of the crypto community suggested distributing the funds to miners, while others proposed splitting them evenly between Paxos and the miners. Nevertheless, the loss of Bitcoin fee funds has raised concerns about Paxos’ security.

The crypto infrastructure provider is also under the scrutiny of the U.S. Securities and Exchange Commission (SEC) over allegations of issuing the BUSD stablecoin in the United States. Paxos faces significant regulatory challenges in multiple regions, including Canada and New York.