Bitcoin Miner Reimburses Paxos With Over $500K In BTC Transaction Fee

A Bitcoin miner has reportedly received about 19.8 BTC in transaction fees and has returned the remaining amount to Paxos, the Paxos Standard (PAX) stablecoin issuer. According to the miner F2Pool, Paxos mistakenly paid over $500,000 in BTC transaction fees to it.

Reaction Trails Recent BTC Transaction

On September 10, the crypto community was shocked following reports that a Bitcoin miner received $500,000 in fees to move only $2,000 worth of BTC. The crypto community considered the fee outrageous since the average fee for such a service was around $2 at the time.

Moreover, the transaction, which has now become the most expensive BTC transaction fee ever paid in USD, has sparked several theories as to what could have caused such an error in the first place. One possibility is that the transaction’s sender made an error.

Some analysts believe the firm copied and pasted data and unknowingly pasted an output into the fee box without cross-checking. Another consideration is that the sender purposefully paid a high fee to speed up the transaction, possibly because they needed the funds to arrive at the right time.

However, some crypto enthusiasts have speculated that the transaction could be part of a more nefarious scheme, such as a money laundering operation or a way to manipulate the Bitcoin market. While responding to the development, Paxos announced on September 13 that their server transferred $2.4 million in PAX to a customer’s PayPal account without authorization.

The company assured its customers of the safety of their funds and that the transferred asset belonged to Paxos. Paxos also clarified that PayPal wasn’t involved in any way in the mishap and admitted it was its fault.

The stablecoin issuer disclosed that the incident resulted from “human error” and that the firm is taking steps to ensure the error doesn’t happen again.

Miner Reveals Reason For Refund  

Meanwhile, the Bitcoin miner who received a $500k overpayment in BTC from Paxos tweeted on X about the company’s action. The miner stated that they had agreed to refund the amount to Paxos but were disappointed that they could not do so.

The mining platform also requested the help of their X followers on what they would do to remedy the situation. Most of their followers voted for the funds to be distributed to other Bitcoin miners.

Later on, the miner stated that it had decided to refund the money to Paxos because it was the right thing to do, considering the circumstances. In the past, thousands of dollars have been lost due to Ethereum (ETH) transaction fee errors.

In one notable instance, a user accidentally sent nearly $400,000 in ETH to the wrong address in 2019. The user inaccurately pasted the ETH amount into the incorrect field, resulting in a massive transaction fee.

Fortunately, the Ethereum mining pool Sparkpool was able to trace the address and assist the user in reclaiming half of the lost funds. Another notable incident was the loss of over $1 million in ETH by a group of individuals due to a phishing scam last year.

Similar instances have occurred where individuals have lost thousands of dollars worth of crypto assets after sending the funds to the wrong addresses.