Paxos recovers its $500,000 'fat finger' Bitcoin transaction fee

[Woodie]

Looking at the nature of the transaction , coins were sent with an overpaid transaction fee, but seeing f2pool refunded this fee does this mean this transaction cost Paxos zero satoshis  or maybe some special deal was made and btw,what of the cost of energy consumed during the mining process is this not to be factored in??


I wonder how this transaction would have gone had a private miner mined this block with the ~$500k

[Wapfika]

Looking at the nature of the transaction , coins were sent with an overpaid transaction fee, but seeing f2pool refunded this fee does this mean this transaction cost Paxos zero satoshis  or maybe some special deal was made and btw,what of the cost of energy consumed during the mining process is this not to be factored in??

AFAIK, They only refund the overpaid amount and take some fee from the 19BTC original fee. I remember reading the owner of mining pool rant tweet about this incident and mention about the fees IIRC.

I wonder how this transaction would have gone had a private miner mined this block with the ~$500k

I think it can still possibly tracked down since most of miners exchange their coins on exchange. They probably do KYC since no one would expect an insane transaction fee like this. But I wonder if he/she will refund voluntarily.

[BVeyron]

On September 10th, there was a Bitcoin transaction where the sender accidentally paid a much higher transaction fee. They paid $500,000 in fees to transfer only $200 worth of Bitcoin.

The good news is that F2Pool, a mining pool, confirmed on social media that Paxos, a crypto company, has returned the excess $500,000 in Bitcoin transaction fee to the rightful owner

Looks like money launderung, haha In general, such things are quite suspicious. Also, it could be a media scandal, made solely for an ad campaign... Such things don't happen with people with no $500,000, and things that happen with people having these sums are always really suspicious... So, in general, a good news is that money can be returned in such cases.

[Abiky]

On September 10th, there was a Bitcoin transaction where the sender accidentally paid a much higher transaction fee. They paid $500,000 in fees to transfer only $200 worth of Bitcoin.

The good news is that F2Pool, a mining pool, confirmed on social media that Paxos, a crypto company, has returned the excess $500,000 in Bitcoin transaction fee to the rightful owner as a reimbursement.

..

Link to the confirmed transaction

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Information Source Link 1

Information Source Link 2

It was a nice gesture from the mining pool. But doing so would greatly defeat Bitcoin's original purpose. Wasn't BTC created as a decentralized, permission-less cryptocurrency? Since when do we need to return TX fees because of a mistake? F2Pool returned the funds because a prominent company (Paxos) made a mistake. But what if it was an ordinary person like you and me? I doubt they will do the same.

What happened recently, tells us BTC is becoming no different than banks. After all, centralized mining pools dominate the network. This is just like ETH's "The DAO" hack where funds were returned to the original investors. The ETH blockchain was "rolled back" as a result. I believe the whole point of crypto/Blockchain tech is about transaction finality, and decentralization. Unfortunately, players with big economic interests having been moving Bitcoin away from its original purpose. As long as there's money to be made, nothing else matters. Who knows what would be of Bitcoin in the future? Just my thoughts

[franky1]

AFAIK, They only refund the overpaid amount and take some fee from the 19BTC original fee. I remember reading the owner of mining pool rant tweet about this incident and mention about the fees IIRC.

nope F2pool did not take 'some fee' from the 19.8btc amount. they gave the full fee 100% back

looking at the original payment error
https://www.blockchain.com/explorer/transactions/btc/d5392d474b4c436e1c9d1f4ff4be5f5f9bb0eb2e26b61d2781751474b7e870fd
from                                                                   to
bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3       bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3
19.89514072                                                         0.06595313

                                                                            1FUPHrrscTwuJN93aSuNV6nHERDGyZAebM
                                                                            0.00256543

                                                                            1H1nsFGPHFNVBVbrQY2tPxnbWrxuMyGHmh
                                                                            0.00207202

                                                                            bc1qn648pv0jn4m6tpt8nvg58m69x9tq2mfr06m94r
                                                                            0.00193031

                                                                            1CVfqCNnfRYsBjEn3A592iNz96FRp32ZcC
                                                                            0.00153351

fee =19.82108632 (based on math of the above ('from' minus 'to' = fee))

the return/refund
https://www.blockchain.com/explorer/transactions/btc/1b9adb2878fce5cd1b6a11a011e3965f904829228d57cf90ca6731cd501890c6
bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3
19.82108632

is the exact amount of the entire fee(100%).. meaning paxos who made the error paid absolutely no fee at all to send the
small amounts to:
1FUPHrrscTwuJN93aSuNV6nHERDGyZAebM
1H1nsFGPHFNVBVbrQY2tPxnbWrxuMyGHmh
bc1qn648pv0jn4m6tpt8nvg58m69x9tq2mfr06m94r
1CVfqCNnfRYsBjEn3A592iNz96FRp32ZcC

so f2pool didnt even take a cut for the refund. nor even a fair fee amount for the transaction in question

[Agbamoni]

On September 10th, there was a Bitcoin transaction where the sender accidentally paid a much higher transaction fee. They paid $500,000 in fees to transfer only $200 worth of Bitcoin.

The good news is that F2Pool, a mining pool, confirmed on social media that Paxos, a crypto company, has returned the excess $500,000 in Bitcoin transaction fee to the rightful owner

Looks like money launderung, haha In general, such things are quite suspicious. Also, it could be a media scandal, made solely for an ad campaign... Such things don't happen with people with no $500,000, and things that happen with people having these sums are always really suspicious... So, in general, a good news is that money can be returned in such cases.

Are you suggesting that these two companies were merely trying to gain clout on social media by showcasing these transactions? I don't think so. It's pretty clear when we look at the transaction details and how they unfolded. Both of these companies have solid reputations in the Bitcoin mining and transaction space. What we should acknowledge here is that by reimbursing the accidental Bitcoin transaction fee, they have not only earned more trust from their users but also demonstrated to the world that correcting excessive transaction fees is possible. This shows their commitment to serving the broader Bitcoin community rather than solely focusing on making huge profits.

[franky1]

paxos and f2pool didnt do a private deal. this is obvious because instead paxos doing a private pushtx of the transaction to only f2pool to ensure only f2pool mined it. the transaction was released to the entire pre-confirm relay network meaning any pool could have grabbed it. it was just luck that f2pool grabbed it first and solved a block containing it.

this however demonstrates that paxos wallet software has a bug or there was a human error involved

[philipma1957]

On September 10th, there was a Bitcoin transaction where the sender accidentally paid a much higher transaction fee. They paid $500,000 in fees to transfer only $200 worth of Bitcoin.

The good news is that F2Pool, a mining pool, confirmed on social media that Paxos, a crypto company, has returned the excess $500,000 in Bitcoin transaction fee to the rightful owner

Looks like money launderung, haha In general, such things are quite suspicious. Also, it could be a media scandal, made solely for an ad campaign... Such things don't happen with people with no $500,000, and things that happen with people having these sums are always really suspicious... So, in general, a good news is that money can be returned in such cases.

dude you are wrong it is not money laundering. no one in their right mind would launder money it this manner.

read what franky1 said.

[franky1]

dude you are wrong it is not money laundering. no one in their right mind would launder money it this manner.

read what franky1 said.

this particular event was not an orchestrated attempt to launder (due to the public broadcast of the TX pre-confirm). thus no control over where the value would end up. and also the pool itself used rewards that are linked back to the spend.. so its not like they tried to hide things

however laundering IS possible.
if you have a contract with a pool to give them value as fee's(via private pushtx rather than public relay) it will destroy the utxo taint path of the value when spent as a confirmed tx. and become a 'fresh coin' in block reward form. whereby a pool could use other rewards unlinked to the spend or other stash of coin to pay out to a new address of the spender thus the spender gets value back with different/no taint

but as i said. this event of paxos vs f2pool was not that, due to lack of organisation and methodology

however paxos does now have 19.8btc of 'freshcoin' straight from a mining reward. so although not orchestrated laundering. they do now have the benefit of freshcoin with no taint

[uchegod-21]

Makes you wonder how a company of such size($2.4 billion as per Forbes) makes such an amateur mistake. Like, probably just having a second person(which I'm pretty sure they can afford) to double check the transaction setups will mitigate such mistakes.

In cryptocurrency, no one is above mistakes. It can happen to anyone and that is why we are advised to be very careful during transactions. I remember not quite long that theymos made a mistake and sent coins upto $1k to a newbie who refunded him.
Although, people has been pointing towards the conspiracy way which is also very much possible. But let us assume the only thing that happened is what we are aware of, and it is fine there is a refund.

[cafter]

so although not orchestrated laundering. they do now have the benefit of freshcoin with no taint

what benefits a company can have if they have fresh coins? in my mind i just know one benefit: they can deposit it in exchange without any fraud issues,
what are the other benefits?

[franky1]

so although not orchestrated laundering. they do now have the benefit of freshcoin with no taint

what benefits a company can have if they have fresh coins? in my mind i just know one benefit: they can deposit it in exchange without any fraud issues,
what are the other benefits?

mainly its the lack of taint.. but there are in other instances of scammers who try to sell parts of a reward as "rare sats" under many guises for a premium

[Agbamoni]

Makes you wonder how a company of such size ($2.4 billion as per Forbes) makes such an amateur mistake. Like, probably just having a second person(which I'm pretty sure they can afford) to double check the transaction setups will mitigate such mistakes.

In cryptocurrency, no one is above mistakes. It can happen to anyone and that is why we are advised to be very careful during transactions. I remember not quite long that theymos made a mistake and sent coins upto $1k to a newbie who refunded him.
Although, people has been pointing towards the conspiracy way which is also very much possible. But let us assume the only thing that happened is what we are aware of, and it is fine there is a refund.

This is good I don't know some individual can genuinely refund accidental transaction to the rightful owner. Now i believe we have trusted members in the forum.