Paxos recovers its $500,000 'fat finger' Bitcoin transaction fee - page 2.

Darker45

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Quote from: Agbe on September 19, 2023, 05:09:30 PM

Transaction fee can be recovered? How? This is the first time I am hearing this. And the first time when I saw the transaction fee really it was something else thay was a huge amount of money. The mining pool or the company that did it was good one. We thank God we have such companies in the blockchain. Such mistake is too expensive. The sender has learned his lesson.

1. In principle, transaction fees can't be recovered. What's paid is paid, and since Bitcoin transactions are irreversible, you simply can't take back what you've already sent. What happened here is that F2pool created a separate transaction sending Paxos an amount that was deemed extra.

2. The mining pool or company that sent it back isn't necessarily good. We won't be thanking a god for it. It just so happened that they're an identifiable company that has a public reputation and that the company who committed the error was also a popular company. I doubt F2Pool would be good enough to consider sending you back your transaction fee if you erroneously paid $2,000 for a $10-transaction.

3. Paxos should learn its lessons. At the same time, we should also learn ours. Paxos had just inadvertently shown a huge red flag. We should be more careful in dealing with it. Paxos is a trust company and it shows it might not be worth our trust in handling funds.

philipma1957

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Quote from: Agbe on September 19, 2023, 05:09:30 PM

Transaction fee can be recovered? How? This is the first time I am hearing this. And the first time when I saw the transaction fee really it was something else thay was a huge amount of money. The mining pool or the company that did it was good one. We thank God we have such companies in the blockchain. Such mistake is too expensive. The sender has learned his lesson.

Okay the pool or solo miner that mines the block gets the fees.

F2pool has a pool wallet so that wallet grabbed 6.25+19 = 25.25 coins.

They if the fee was not a mistake split the 25.25 coins with the miners. Their fee is say 2% or .5 coins the 24.75 then goes to the miners.

It is a multistep process. So the pool can hold the block and the fees since it all goes to their address. then to the miners.

there are pools that auto send the coins.

ie same block of 25.25 coins 2 % to the pool operator and rest to the miners all in one step. In this case the pool does not control the coins it is a one step process.

https://pool.laurentiapool.org/#/work

coins would go to the miners and the pool op in 1 step

https://solo.ckpool.org/

a fee goes to pool op rest goes to solo block winner 1 step

or a single solo miner with no pool 100% got to him.

In the cases above it would have been far sloppier to get a refund back to Paxos/Paypal

I for one would be looking for a lawyer and a legal agreement to protect me from USA taxes since that would have went to a kyc address and shown as income. If I hit with https://pool.laurentiapool.org/#/work

Agbe

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Transaction fee can be recovered? How? This is the first time I am hearing this. And the first time when I saw the transaction fee really it was something else thay was a huge amount of money. The mining pool or the company that did it was good one. We thank God we have such companies in the blockchain. Such mistake is too expensive. The sender has learned his lesson.

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Quote from: Z-tight on August 16, 2023, 08:05:23 AM

Quote from: Cookdata on August 16, 2023, 05:25:05 AM

However, if it's an overpaid fee in a transaction, perhaps you made a mistake during the course of a transaction, they may (low chances) return the fees to you for the error.

Whatever tx fee or fee rate attached to your tx goes to the miner, even if you estimated wrongly and overpaid, there is no such return, the fees is what miners use to decide the priority of transactions in the mempool, they can't decide if you willingly overpaid or not. In a tx what returns back to you is change, if there is any. If you are spending a particular utxo, but you are not spending all of it, one of the outputs returns to you as change. Tx fee is simply inputs - outputs, that is what finally goes to the miner.

Just for the record and to prove my point, I hope you believe that miners do consider some transactions where huge fees are return. This is the second time in my life in Bitcoin I have experience this, you can navigate to OP first page and comfirm.

Mistakes are avoidable sometimes but I will really do everything in my power to avoid this because not everyone will reason with you in such kind of difficult situations, that's why concensus rule exit and is been followed by everyone to avoid this kind of things, bull run is also coming, I also hope we don't see more of this.

Stedsm

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All is well that ends well, a perfect saying that goes with this situation. I never thought that they'd just return it so quickly as I've also seen some instances taking place before, but only in a few cases did the miners return the fees, whereas in other cases they kept it and used it.

Technically, miners have the right not to give it back because it's the fault of sender and not the miners, miners did their job, simple. I'm shocked to see these big names involved in the transaction and how could they commit such a silly mistake. Grin

OgNasty

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I’m always amazed when these giant accidental transaction fees get returned by the miners that receive them. I’m not sure if I would be able to return half a million dollars from a block I fairly mined, but I’d like to think I would. Kudos regardless to all of the mining pools that do return these fees. It shows that they aren’t all about money.

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Quote from: kryptqnick on September 19, 2023, 07:06:58 AM

It's wonderful that such a big amount of money was returned. I can't imagine what those who made such a costly mistake were feeling, and I remember people voicing concerns in the thread that they don't think it's likely that the funds will be returned. Reading the discussion, I don't buy that this transaction was intentional. I think it was an honest mistake, and we shouldn't blame the person responsible for it, as sometimes terrible mistakes just happen, and it's hard to understand how they happen beyond the fact that making mistakes is a part of human nature.

You know that people would be always have that something to say when it comes to those probabilities on which it is really that simply showing some trust issues or something that we would really be

loving to go into those things which blaming which is casual or as i said pointing out those possibilities which even if it isnt true. We would really be having those doubts or really trust issues i had said earlier. Its true that how about into those people who had made out some mistake on making use of those big amount of fees on their transactions? Usually big numbers and known companies or personalities would really be making out such noise and this is why to those miners who do able to receive such fee will normally be making out such move on giving it back
because it would really be affecting their reputation of course and this is something that they do avoid.

For those normal joes then for sure it wouldnt really be given back but well we cant really make out conclusions since we dont know if ever it did happen
about in between miners and to those who had mistakenly sent out those huge fees on their transactions.

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Quote from: Pmalek on September 19, 2023, 11:41:46 AM

Which laws and from which countries refer specifically to Bitcoin mining rewards? Do they even understand it to write effective laws for mining?

That's why I said assuming, however written or not, in crypto when you mine a block, whatever fee+block reward you receive is yours, I like it because it's more natural, like jungle. But in my country, a bunch of donkeys and cows rule and make up the laws, last thing I know to mine, you need a permit and you'd have to pay for electricity with export price.

Last time I think a similar case happened with antpool if I'm not mistaken?

This "computer error" had a good side effect, got people talking about 3 big companies, it was like an advertisement for them, I didn't know what paxos is, now I do.

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Quote from: mk4 on September 18, 2023, 11:30:23 AM

Makes you wonder how a company of such size($2.4 billion as per Forbes) makes such an amateur mistake. Like, probably just having a second person(which I'm pretty sure they can afford) to double check the transaction setups will mitigate such mistakes.

I doubt if a company can make such a mistake, it is really not adding up. No one can send $10,000 transaction without double checking and sometimes checking it several times. Saying it was a software for automatic transaction does not make sense as well because it was not a bulk sending. The only thing that is making sense is that it was delibrate, the purpose of which I do not know.

Quote from: SquirrelJulietGarden on September 18, 2023, 11:35:35 AM

Quote from: mk4 on September 18, 2023, 11:30:23 AM

Makes you wonder how a company of such size($2.4 billion as per Forbes) makes such an amateur mistake. Like, probably just having a second person(which I'm pretty sure they can afford) to double check the transaction setups will mitigate such mistakes.

Weeks ago, it was reported after analysis that it is error from an software which is responsible for processing transactions automatically. I doubt that it is an error but an intentional setup to create some fud on the market.

Rather than create fud, I think this even sound as positive news for Bitcoin and the entire Bitcoin community. It demonstrates the love and transparency that is possible even among Bitcoiners. The people involved might just want to be in the news; such news is good for all of us.

Pmalek

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Quote from: digaran on September 18, 2023, 01:24:52 PM

So it was a big company mistakenly sending 20 bitcoins as fee and then a large mining pool who happened to mine that block, and at the end they returned the coins with no problem? Why does that sound very generic and usual? Lol.

Well, it's not the first time that something like that happens. I remember similar cases from the past, but not that many. I don't know who the senders were, and it's not important. My point is, the mining pools returned the coins in those cases as well.

Quote from: digaran on September 18, 2023, 01:24:52 PM

I have no updated information about new crypto laws, but I'd assume once you mine a block, no matter what, all the coins are yours. In legal terms of course.

Which laws and from which countries refer specifically to Bitcoin mining rewards? Do they even understand it to write effective laws for mining?

philipma1957

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Quote from: digaran on September 19, 2023, 07:21:15 AM

Quote from: BlackHatCoiner on September 19, 2023, 04:32:43 AM

That's very strange. What if I owe some money to a friend? Should that transaction be equally taxable with realized profit from an investment?

Actually stock and paper gold market investments are tax free here to save the government from bankruptcy, and other financial transactions require evidence and justifiable reason for the banks to process the transaction, it's related to FATF rules, the gov refused to join international FATF, but they are enforcing it's rules domestically.

If you are buying a car, you need to provide the bank with official documents of the deal to let you transfer the money to the seller, they charge the tax for such deals before registering the car to your name. And if you owe a friend, you can't send more than $4,000 per day without officially approved docs. It's a circus in general, the laws of taxation.

In the case of paxos, I believe that pool has to answer to it's government wherever they are located, and all the documents of all financial transactions globally goes to FATF headquarters for assessment. The new universal rule of finance; everyone is a criminal doing money laundry unless legally proven otherwise with evidence.

I have to agree with this attitude in a lot of countries it seems like the governments enforce that way.

Ties in with soldered batteries in a cell phone so that is is always a spy device in the name of anti-terroism.

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Quote from: BlackHatCoiner on September 19, 2023, 04:32:43 AM

That's very strange. What if I owe some money to a friend? Should that transaction be equally taxable with realized profit from an investment?

Actually stock and paper gold market investments are tax free here to save the government from bankruptcy, and other financial transactions require evidence and justifiable reason for the banks to process the transaction, it's related to FATF rules, the gov refused to join international FATF, but they are enforcing it's rules domestically.

If you are buying a car, you need to provide the bank with official documents of the deal to let you transfer the money to the seller, they charge the tax for such deals before registering the car to your name. And if you owe a friend, you can't send more than $4,000 per day without officially approved docs. It's a circus in general, the laws of taxation.

In the case of paxos, I believe that pool has to answer to it's government wherever they are located, and all the documents of all financial transactions globally goes to FATF headquarters for assessment. The new universal rule of finance; everyone is a criminal doing money laundry unless legally proven otherwise with evidence.

kryptqnick

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It's wonderful that such a big amount of money was returned. I can't imagine what those who made such a costly mistake were feeling, and I remember people voicing concerns in the thread that they don't think it's likely that the funds will be returned. Reading the discussion, I don't buy that this transaction was intentional. I think it was an honest mistake, and we shouldn't blame the person responsible for it, as sometimes terrible mistakes just happen, and it's hard to understand how they happen beyond the fact that making mistakes is a part of human nature.

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Quote from: SquirrelJulietGarden on September 18, 2023, 11:35:35 AM

Weeks ago, it was reported after analysis that it is error from an software which is responsible for processing transactions automatically. I doubt that it is an error but an intentional setup to create some fud on the market.

If that was intentional, it would be very risky and dangerous for Paxos to be doing that because they have a legal obligation from Paypal to secure those funds in their custody. If they wanted to play around with the market like FTX which had a bunch of amateurs running everything, there would be lawsuits immediately sweeping through from Paypal.

Quote from: BlackHatCoiner on September 19, 2023, 04:32:43 AM

Quote from: hugeblack on September 18, 2023, 02:10:31 PM

* Agreement with the mining pool, not to repay the money and consider it as net profit after paying the tax.

Again, I'm a little confused by the US tax system, but isn't transaction fee considered a transaction itself by the book? What difference would it make if they sent them $500,000 via bitcoin in secret? What matters is that miners collect money by the network.

Quote from: digaran on September 18, 2023, 10:41:30 PM

Not sure about US, but in my country they have recently changed the tax laws, whatever I mean whatever comes to your bank account will count towards taxation

That's very strange. What if I owe some money to a friend? Should that transaction be equally taxable with realized profit from an investment?

Mining fees on the blockchain do not count towards taxes until you cash them out for US dollars or whatever fiat currency your country uses.

If you get a refund of that money, that doesn't count for taxes because it does not classify as capital gains .

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Oh wow, I didn't expect to see a new development in this case.

I mean it was already crazy in the first place but now reading that the fee has been returned is even more astonishing than the original mistake.
Maybe there was some deal behind closed curtains or something but this really looks a little bit strange to me. How and why 2 such strange things happen is beyond me.

Z-tight

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Quote from: Casdinyard on September 18, 2023, 01:56:37 PM

I didn't have doubts about F2Pool returning the money to the user, they are already established as it is, and they probably earn this much amount (and more!) just from the sheer amount of miners in their platform, this is but a dime to them so to speak.

This isn't really about how big or established F2Pool is, it is a problem with this big companies like Paxos who think they can always have it their way, they are used to reversing, freezing and confiscating funds in their centralized system, so it may probably have been better if F2Pool had kept the money and distributed it to their miners to set a precedent, because BTC tx's aren't reversible. Even after the poll on X on what should be done with the funds, 35.9% voted they keep it, while 28.9% voted for a refund.

Quote from: Casdinyard on September 18, 2023, 01:56:37 PM

f2pool will surely receive more people coming in and trusting them moving forward just from this success story alone

Trusting them with what? They are a mining pool and they will continue competing for blocks with other pools and solo miners.

BlackHatCoiner

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Farewell, Leo

Quote from: hugeblack on September 18, 2023, 02:10:31 PM

* Agreement with the mining pool, not to repay the money and consider it as net profit after paying the tax.

Again, I'm a little confused by the US tax system, but isn't transaction fee considered a transaction itself by the book? What difference would it make if they sent them $500,000 via bitcoin in secret? What matters is that miners collect money by the network.

Quote from: digaran on September 18, 2023, 10:41:30 PM

Not sure about US, but in my country they have recently changed the tax laws, whatever I mean whatever comes to your bank account will count towards taxation

That's very strange. What if I owe some money to a friend? Should that transaction be equally taxable with realized profit from an investment?

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Quote from: BlackHatCoiner on September 18, 2023, 01:52:00 PM

Don't you guys report from realized profit only, when it comes to bitcoin?

Not sure about US, but in my country they have recently changed the tax laws, whatever I mean whatever comes to your bank account will count towards taxation, the reason which you received the money doesn't matter for governments any more, that's what philipma is saying, it takes a lot of efforts and proving it was a mistake.

Speaking from experience, especially crypto related services/companies triple check any amount larger than $1000 when they are transferring the funds, and by triple I mean at least 2 people check to see everything is Ok, hence this "mistake" makes no sense.

philipma1957

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Quote from: SquirrelJulietGarden on September 18, 2023, 11:35:35 AM

Quote from: philipma1957 on September 18, 2023, 09:37:04 AM

Well not my problem and some programmer is going to be in trouble for the error.

Do you still think it is an error or a set up plan by those companies?

Quote from: mk4 on September 18, 2023, 11:30:23 AM

Makes you wonder how a company of such size($2.4 billion as per Forbes) makes such an amateur mistake. Like, probably just having a second person(which I'm pretty sure they can afford) to double check the transaction setups will mitigate such mistakes.

Weeks ago, it was reported after analysis that it is error from an software which is responsible for processing transactions automatically. I doubt that it is an error but an intentional setup to create some fud on the market.

I agree with you that if it is an error by automatic processing, why it happened when Bitcoin need to be dumped by whales?

If it is not automatic error, but manual error, a big company must have double check or even tripple check when proceed transactions especially such very big transaction.

Its an error. I mention my small mining pool with a small chance of hitting that block. But there are many unknown miners maybe 10% of all hash goes to unknown miners. This means they had a ten percent chance of never seeing that money.

Or a huge hassle to get it refunded.

Like I mentioned I would need a lawyer if my little pool hit it.

I likely would put 8 of the 19 btc in an escrow account until I and the other miners were sure we have no USA tax issues refunding it.

Some people mine fully anonymous if they hit the refund would not have happen.

It makes it plain and simple error. Shame on them for poor security.

If the send wallet had only 5 btc the worse mistake would be only 4.99 btc

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Quote from: Pmalek on September 18, 2023, 11:58:15 AM

@Agbamoni
Maybe you should simplify the second paragraph of your OP. The one where you are writing about F2Pool returning the coins to Paxos. You made it sound like Paxos returned the bitcoin. However, they were the recipient of the coins. I know what you wanted to say. But for clarity, I suggest an edit.

Thank you for the advice ill do that immediately. It should b clarified so that the information will be passed accordingly

Topic: Paxos recovers its $500,000 'fat finger' Bitcoin transaction fee - page 2. (Read 542 times)