The controversial crypto exchange, Bitfinex, spent nearly $24 million in transaction fees to deposit just $100,000 on the Ethereum blockchain.
It’s considered one of the most expensive transactions — and an epic “fat-finger” trade — in the history of the blockchain.
Records on the Ethereum blockchain tracker show the error occurred when Bitfinex was sending $100,000 to Tether, a Stablecoin pegged to the dollar, through DeversiFi (a decentralized exchange).
Often, customers transacting on the Ethereum blockchain pay crypto miners “gas fees” in exchange for incorporating trades into the digital ledger — amounts often vary depending on the demand and supply of computing powers at the time.
A pricey error
Despite the boom in decentralized exchanges, unpredictable, costly fees are a common issue in the crypto world. The $24 million transaction fee was a pricey error, which DeversiFi acknowledged in a Tweet as “erroneously high gas fee”.
The error — aptly known as a “fat-finger” error — can inexplicably trigger sharp swings in traditional banking markets. But in the crypto world? They do more harm as blockchain transactions are supposedly irreversible.
In an email, Bitfinex spokesperson based in British Virgin Island said Bitfinex third-party integrations will foot the fees for the transactions. DeversiFi also confirmed the pricey error in a recent statement.
So, Bitfinex expects the decentralized exchange to investigate the source of the error and have “this matter sorted on their side”.
Blockchain operations unaffected
Although the fat-finger error is expensive, DeversiFi said in a Tweet that it guarantees the safety of customer’s funds on their platform. The exchange further promised to resolve the internal issue. “Operations are unaffected,” read part of the Tweet.
Bitfinex and Tether share executives. Bitfinex and DeversiFi are closely linked (as in, three DeversiFi co-founders are former executives at Bitfinex). The links between these companies enable cheaper Tether token transfers.
Tether and Bitfinex aren’t new to controversy. Tether executives are facing criminal investigations. And the New York Attorney General is probing the Bitfinex exchange where customers’ funds were supposedly lost or stolen in the past.
Back in 2019, a firm behind Tether triggered a plunge in Bitcoin after mistakenly doubling the supply of the token in circulation. Investors occasionally complain about accidentally entering exorbitant “gas fees” errors.
Users on the Ethereum blockchain often enter amounts they want to pay in gas fees. But the amount depends on the size of their trade, and how eager they are for the transactions to be completed.
Bitfinex $24 million erroneous transaction fees have since been returned.
