Paxos Owns Up to Costly Bitcoin Fee Blunder, Ensures User Funds are Unaffected

Paxos confirmed it was behind a Bitcoin (BTC) transaction with an excessive $500,000 network fee on September 10th. The stablecoin issuer assures that all customer funds are safe.

Paxos released a statement on September 13th to clear the air about a Bitcoin transaction that had the crypto community abuzz.

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Social media users had been speculating that PayPal might be linked to the transaction, following claims by analytics platform OXT that the sending wallet was affiliated with PayPal.

The revelation from Paxos disabuses these assumptions. A spokesperson for the company declared:

Paxos overpaid the BTC network fee on Sept. 10, 2023. This only impacted Paxos corporate operations. Paxos clients and end users have not been affected and all customer funds are safe. 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.

The transaction, initially detected on September 10th, paid a staggering 20 BTC in fees (valued at over $515,000 at that time) to send a mere 0.07 BTC (less than $2,000).

Jameson Lopp, co-founder of Casa Wallet, had speculated earlier that the account responsible for the transaction appeared to be “an exchange or payment processor with buggy software,” considering it had completed over 60,000 transactions from that address.

Adding another layer to the story, the Bitcoin mining pool F2Pool, which confirmed the problematic transaction, had publicly offered to return the excessive fees if the sender claimed them within three days. Failure to do so would mean the payment would be distributed to the pool’s contributors.

Prior to Paxos' public statement, a Bitcoin enthusiast named Mononaut speculated on X (formerly Twitter) that PayPal was the erring party based on blockchain transaction patterns and analytics platform OXT data. The hypothesis gained traction until Paxos stepped forward to claim responsibility for the misstep.

It is worth noting that Paxos has recently teamed up with online payment giant PayPal to roll out its native stablecoin PayPal USD (PYUSD).

Gile K., Market Sentiment Analyst

Gile is a Market Sentiment Analyst who understands what public events may form what emotions. Her experience researching Web3 news and public market messages – including cryptocurrency news reports, PRs, and social network streams – is critical to her role in helping lead the Crypto News Editorial Team.
As an intelligent professional in public relations, together with the team, she aims to determine real VS fake news patterns, and bring her findings to anyone searching for unbiased news and events happening in the FinTech markets. Her expertise is uncovering the latest trustworthy & informative Web3 announcements to the masses.
When she's not researching the trustworthiness of mainstream stories, she spends time enjoying her terrace view and taking meticulous care of her outdoor environment.

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