For $100,000, A Cryptocurrency Exchange Pays $24 Million In Transaction Fees
While unpredictable and expensive fees have long been a source of complaint in that industry, the $24 million price tag appeared to be an oversight.
Bitfinex, one of the most polarising exchanges in the crypto world, paid $23.7 million in transaction fees to deposit $100,000 on the blockchain in what appears to be a fat-finger move for the ages. At 7:10 a.m., Bitfinex began transferring that amount in Tether, a stable token tethered to the dollar, to DeversiFi, a decentralised exchange. Monday's records on blockchain tracker Etherscan show that they were set in New York time.
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 decentralised finance boom, the $24 million price tag appeared to be a mistake, with DeversiFi calling it “erroneously high” in a tweet. While fat-finger mistakes have been known to cause irrationally large movements in regular markets, they are especially problematic in the crypto realm because blockchain transactions are presumably irreversible.
“In transactions like these, third-party integrations with Bitfinex shoulder the fees,” a representative for the British Virgin Islands-based Bitfinex said in an email. “This was also confirmed in a recent announcement by DeversiFi. We eagerly await DeversiFi's inquiry and resolution of this situation on their end.”
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 the cheap transfer of Tether tokens.
“No DeversiFi customer assets are at risk, and this is an internal problem that DeversiFi is working to resolve,” the company said in a tweet. “There is no impact on operations.” Tether and Bitfinex are no strangers to controversy, with the exchange recently settling a probe with the New York Attorney General and the stable coin's executives facing criminal charges. In the past, customer funds have been stolen or lost.
On Ethereum, the user specifies how much gas they want to pay, which is usually determined by the size of their trade and their desire for the transaction to be completed quickly. The fines were previously revealed by The Block.
Back in 2019, the firm behind Tether more than doubled the supply in circulation by mistake due to confusion over the token decimals, fueling a plunge in Bitcoin. Individuals also occasionally complain about social media about accidentally entering exorbitant gas fees.