The account to which the company overpaid $500,000 for a Bitcoin transfer on September 10 belongs to Paxos, according to a statement from the company on September 13. Paxos claims that end users have not been affected and all user funds are safe. Paxos is best known as the issuer of stablecoins, including PayPal USD (PYUSD) and Pax Dollar (USDP), but also operates a crypto brokerage offering Bitcoin (BTC).
The announcement comes after users on X (formerly Twitter) speculated that PayPal could be responsible for the transaction, as analytics platform OXT identified relevant wallet accounts belonging to PayPal. A Paxos representative told Cointelegraph that PayPal takes no responsibility as the error was its own, stating:
“Paxos overpaid BTC network fees on September 10, 2023. This only affected Paxos corporate operations. Paxos customers and end users were not affected and all customer funds are safe. This was due to an error in a single transfer This was caused and has now been fixed. Paxos is contacting miners to recover the funds.”
The erroneous trade was first discovered on September 10, shortly after it took place.According to blockchain data, the sender Paid Sending 0.07 BTC (worth less than $2,000 at the time) required approximately 20 BTC (worth over $515,000 at the time). At that time, Casa wallet co-founder Jameson Lopp Announce The sending account “appears to be an exchange or payment processor with problematic software” as it has made more than 60,000 transactions from the same address.
The block containing the transaction has been confirmed by the Bitcoin mining pool F2Pool. On September 10, the pool manager supply If a claim is made within three days, the funds are returned to the person who sent the transaction. Otherwise, high fees will be paid to the hash power contributors of the mining pool.
Prior to Paxos’ statement, Bitcoin enthusiast Mononaut claimed on X that PayPal was responsible for the transaction.
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Fat Finger Belongs to PayPal https://t.co/pKN0w5SfKB— The Lone Ranger (@mononautical) September 13, 2023
According to Mononaut, the sending account bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3 exhibited behavior that “very closely matches the behavior of the now inactive wallet (bc1qhs3gptkxem5y7yaq2yg0un2m8hae6wt87gkx4n).”This invalid address is put on label “Paypal” of blockchain analytics platform OXT.
To provide further evidence for their hypothesis, Mononaut pointed out that this old wallet address transferred funds to the new address through an intermediary account. Bitcoin blockchain data shows old address tagged “Paypal” by OXT transfer in Approximately 18.5 BTC will be sent to bc1qlm0xlahpysq2v9yh5rhcc430xjz3xknqqnyvaf on June 19th. send Approximately 5.37 BTC to the new address where the wrong transaction was later made. Lopp shared this topic, Want to know If PayPal asks for a refund, speak up.
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Paxos later issued a statement confirming that the error was its own fault and not PayPal’s.
Paxos is not the first crypto user or company to potentially pay thousands of dollars due to an error. In 2019, an Ethereum user lost over $300,000 by mistakenly pasting a value into the wrong field. Fortunately, the mining pool agreed to return 50% of the lost funds. In 2020, another Ethereum user mistakenly paid $9,500 for a $120 transaction. The user claimed the error “ruined (their) life.”
In a statement, Paxos claimed that it had contacted the mining company that confirmed the transaction and was trying to recover the lost funds.
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