Paxos Admits to Overpaying Bitcoin Transfer Fee, Denies PayPal Connection
Paxos mistakenly overpays $500,000 for Bitcoin transfer, clears up rumors linking the error to PayPal.
Fri, 15 Sep 2023, 10:48 am UTC
September 10 saw Paxos, a notable name in the crypto industry, mistakenly overpay by $500,000 for a Bitcoin transfer. Their swift acknowledgment on September 13 affirmed that end users remain unaffected by this error and all user funds are safeguarded.
Paxos, recognized for issuing stablecoins such as Pax Dollar (USDP) and PayPal USD (PYUSD), also operates a cryptocurrency brokerage offering Bitcoin. Their quick clarification was essential, especially since discussions on platform X, formerly known as Twitter, were rife with suspicions about PayPal's involvement. This speculation arose due to a wallet identified by OXT, an analytics platform, suggesting links to PayPal.
The truth, however, diverged from these claims. A representative from Paxos clarified to news outlets, explaining that the mistake impacted only Paxos's corporate operations. They elaborated that the overpayment resulted from a single transfer glitch, which has since been rectified. They added that communication with the Bitcoin miner was underway to retrieve the misplaced funds.
When this transaction error was first spotted on September 10, blockchain data showed the sender overpaid fees of almost 20 BTC (equivalent to over $515,000) to send a mere 0.07 BTC (valued less than $2,000 then). Insights from Jameson Lopp, co-founder of Casa wallet, suggested this was indicative of an "exchange or payment processor with faulty software," given that the sender had made over 60,000 transactions from that address.
Interestingly, Bitcoin mining pool F2Pool, which verified the transaction, showed generosity. They offered to revert the funds if the transaction sender stepped forward within three days. If unclaimed, the substantial fee would be disbursed among the pool’s contributors.
Earlier, a Bitcoin follower named Mononaut claimed on X that PayPal was behind the transaction. Mononaut's deduction was based on a comparison of the recent sending account to an older, now inactive one linked to PayPal by OXT.
However, Paxos cleared the air, stating that the slip-up was theirs alone.
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