Paxos admits to bug that charged Bitcoin owner $500k in transfer fees

Blockchain infrastructure company and stablecoin issuer Paxos has admitted its responsibility for a glitch that caused a hapless Bitcoin owner to be charged around half a million dollars on a $2,000 transaction in cryptocurrency.

Paxos confirmed that it was at fault due to the bug, which has since been fixed. However, there are still questions around whether or not the unfortunate victim will see their money returned – because the recipient of the mistakenly inflated transaction fee is apparently refusing to pay it back.

On September 10th, Bitcoin enthusiasts noticed that someone paid a fee of BTC20, equivalent to about $511,000 at the time, to send around $2,000 worth of the same digital currency. In dollar terms, this represents the largest fee ever paid on a BTC transaction.

Theories circulated regarding who was responsible and what caused this costly mistake, which still occurs from time to time in both the Bitcoin and other crypto industries. While some observers suspected that a BTC or other crypto platform might have made the rookie mistake, others began to speculate that PayPal could be involved.

The inflated transaction fee was collected by mining pool F2Pool, and its co-founder, Chun Wang, initially promised to refund it. However, it appears that he has had a change of heart.

“I was annoyed and regretted agreeing to refund that BTC20,” Chun Wang posted on X (formerly Twitter), along with a poll about what F2Pool should do next.

It seems that the curious cryptocurrency market will have to wait for another half a day to see how things unfold. As at this week, the median BTC transaction fee is hovering at around 50-70 cents, while BTC miners are collecting more than $800,000 in fees per day.

Meanwhile, Paxos has said the mistake did not impact its clients, and that it is currently in contact with the miner to recover the funds.