$500,000 Bitcoin Fee Blunder: Paxos Revealed as Responsible Party

Fredrik Vold
Last updated: | 1 min read
Source: Adobe / Rafael Henrique

The US-based crypto service provider Paxos has been revealed as the party responsible for massively overpaying fees on a recent Bitcoin transaction.

The transaction, made on September 10 at 5.10 PM UTC, was for a payment of only $200 worth of BTC, but amazingly came with a transaction fee of around $500,000, setting a new record in Bitcoin transaction fees.

The payment was sent from what many at the time believed was a well-experienced Bitcoin user, given a history of sending and receiving more than 120,000 transactions.

Now, the sender has been identified as Paxos, the US-regulated company that is behind several stablecoins and provides various crypto-related services.

Paxos confirms blunder

In a statement given to crypto news outlet The Block, a Paxos spokesperson confirmed that they were behind the fee blunder.

“Paxos overpaid the BTC network fee on Sept. 10, 2023,” the spokesperson said, while adding:

“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.”

Mining pool co-founder regrets

As Paxos said in the statement, it appears they have indeed been in touch with Chun Wang, co-founder of F2Pool, the mining pool that mined the block containing the transaction.

But despite first promising to keep the fee on hold for three days in case anyone would claim it, Wang on Wednesday said he was “annoyed and regretted agreeing to refund that 20 BTC.”

According to Wang, there was a disagreement with Paxos over the timezone used when counting the days from when he gave his promise.

“So what should I do,” the mining pool operator asked his followers on X.

Responding to Wang’s post, members of the Bitcoin community on X offered different suggestions on how to resolve the matter.

While some suggested the mining pool should simply refund the 20 BTC it received, others said he should distribute it to miners in the pool so Paxos can learn a “hard lesson” from its mistake.

As of press time on Thursday, it appears the situation is still unresolved, with no new updates from Wang about the massive transaction fee.