Crypto Exchange Pays $24 Million in Transaction Fees for $100,000

(Bloomberg) -- Bitfinex, one of the crypto world’s most controversial exchanges, paid $23.7 million in transaction fees to deposit $100,000 on the blockchain in what appears to be a fat-finger trade for the history books. 

Bitfinex was moving that amount in Tether, the stablecoin pegged to the dollar, to the decentralized exchange DeversiFi at 7:10 a.m. New York time Monday, records on blockchain tracker Etherscan show.

Anyone transacting on the Ethereum blockchain pays miners what is known as gas fees in exchange for incorporating their trades onto the digital ledger -- an amount that can vary depending on supply and demand for computing power at any time. While erratic and pricey fees have been a common gripe in that world amid this year’s decentralized-finance boom, the $24 million price tag appeared to be a mistake, with DeversiFi calling it “erroneously high” in a tweet. 

While fat-finger errors have also been known to spark inexplicably sharp swings in traditional markets, they are uniquely problematic in the crypto world since blockchain transactions are supposedly irreversible. 

“In transactions such as these, the fees are shouldered by third party integrations with Bitfinex,” a spokesperson for British Virgin Islands-based Bitfinex said in an email. “This has also been confirmed by DeversiFi in their recent statement. We look forward to DeversiFi’s investigation and to their having this matter sorted on their side.”

Tether and Bitfinex share common owners and executives, while DeversiFi and Bitfinex are also closely linked. The three co-founders of DeversiFi worked at Bitfinex, and the firms Thursday announced a link between them to enable cheap transfer of Tether tokens. 

“No customer funds on DeversiFi are at risk and this is an internal issue for DeversiFi to resolve,” it said in a tweet. “Operations are unaffected.” 

Tether and Bitfinex aren’t strangers to controversy, with the exchange settling a probe with the New York Attorney General earlier this year and executives behind the stablecoin facing a criminal investigation. Customer funds has been stolen or lost in the past. 

On Ethereum, the user fills in how much they want to pay in gas, usually depending on how large their trade is and how eager they are for the transaction to be completed soon. The Block reported the fees earlier.

Back in 2019, the firm behind Tether more than doubled the supply in circulation by mistake due to a confusion over the token decimals, fueling a plunge in Bitcoin. Individuals also occasionally complain on social media about accidentally entering exorbitant gas fees.  

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