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Paxos confirms it’s responsible for $500K mistaken Bitcoin transaction

– The account that overpaid $500,000 in fees on Sept. 10 for a Bitcoin transfer belonged to Paxos, according to a Sept. 13 statement from the company.

– Paxos claimed that end users have not been affected and all user funds are safe.

– Paxos is most well-known as the issuer of stablecoins, including PayPal USD (PYUSD) and Pax Dollar (USDP), but also runs a crypto brokerage firm that carries Bitcoin (BTC).

– The statement comes after users were speculating that PayPal may have been responsible for the transaction due to a related wallet account that had been identified by analytics platform OXT as belonging to PayPal.

– A Paxos representative told that PayPal was not responsible, as the error was its own.

– The mistaken transaction was first discovered on Sept. 10 and fees of approximately 20 BTC (over $515,000 worth at the time) were paid to send just 0.07 BTC (worth less than $2,000 at the time).

– The block that contained the transaction was confirmed by Bitcoin mining pool F2Pool.

– On Sept. 10, the pool’s management offered to return the funds to whoever sent the transaction if a claim was made within three days.

– Before Paxos made its statement, Bitcoin enthusiast Mononaut declared on that PayPal was responsible for the transaction.

– According to Mononaut, the sending account had exhibited behavior that “closely matches the behavior of a now inactive wallet” labeled “Paypal” by blockchain analytics platform OXT.

– Paxos later issued its statement confirming that the mistake had been its own, not PayPal’s.

– Paxos isn’t the first crypto user or company to potentially pay thousands of dollars in fees because of a mistake.

– In 2019, one Ethereum user lost over $300,000 when they mistakenly pasted values into the wrong fields.

– Luckily, the mining pool agreed to return 50% of the funds lost.

– In 2020, another Ethereum user mistakenly paid $9,500 for a $120 trade.

– The user claimed that the mistake had “destroyed [their] life.”

– In its statement, Paxos claimed that it had contacted the mining company that confirmed the transaction and is attempting to recover the lost funds.

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