Bitfinex’s $24 million mistake
Transferring crypto between addresses is not a difficult task on its own. However, since the cost of using the blockchain network constantly fluctuates, you have to estimate the network fees by yourself. This can be a task to put it mildly, and often leads to human error. Bitfinex made headlines last week because of a similar slip-up.
Bitfinex paid $24 million dollars in transaction fees to deposit just a $100,000 worth of Tether (USDT) on the blockchain network. How such a brutal mistake happened is still a huge mystery, and some members of the crypto community suspect it to be a huge marketing stunt to gain free publicity.
How does a mistake like this happen?
Mistakes like these are part and parcel of both the Bitcoin and Ethereum blockchains. Transaction prices are floating, and depend entirely on the principles of demand and supply. Until EIP-1559, there was no way to identify just how much you needed to pay in fees on either chain.
Dozens of third-party solutions like Bitcoiner Live and Eth Gas Station exist, but operate at maximum 90% confidence intervals.
For context, the actual network fee was merely $33. These kinds of errors are capable of causing baffling sharp swings in the market. The main crux of this mistake is that blockchain transactions are irreversible fundamentally. Always remember: You can’t take back your crypto on the blockchain.
So what happens next for Bitfinex?
Fortunately, over $22 million dollars of the missing USDT has been recovered. The highly ranked miner who mined this hefty transaction was the one who returned the sum in good faith As of now, there is little clarity regarding the status of the unrecovered remaining $2 million.
Tether and Bitfinex are no strangers to controversy. Tether is one of the most infamous companies as it has been non compliant with authorities, has spread false propaganda, fired its auditors and what not. The company is under constant speculation as an elaborate scam with just 13 employees and it’s mighty market cap of $60 billion.
Just two years ago, the Tether Scandal posed a large threat to the crypto ecosystem. Bitfinex was accused of covering up Tether’s loss of $850 million in a huge scandal. From Tether’s exorbitant gas fees to “mistakenly” doubling Tether’s supply in circulation, investors are extremely wary of the company and its cryptocurrency.
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