Imagine sending $133 to a friend and being charged a $2.5 million fee. That seems to be the case for a cryptocurrency user who paid a $2.5 million transaction fee during a trade on Wednesday morning using Ethereum, a cryptocurrency similar to Bitcoin but with some key differences.
According to transaction details, which are publicly available, the mistake may have been in setting the price that the trader was willing to pay to have their transaction posted to the Ethereum blockchain, a permanent record of transactions. In Ethereum, like Bitcoin, users may attach a fee to their transactions to incentivize a miner to include their transaction in the next block of data. Normally, this fee is very low compared to the astronomical amounts that can be sent over the blockchain. Oftentimes, wallet calculators are used to inform traders what a good fee is so they don’t overpay.
In this case, however, it looks like the user set a normal limit of “gas” (representing the computational effort), but set the price of gas exorbitantly: .5 ETH per unit of gas. The transaction used up all of the 21,000 gas limit, which amounted to roughly 10,668 ETH in fees, or roughly $2.5 million, going to the miner.
In other words, it was a trade in ether valued at $133.95 that came attached with a $2.5 million transaction fee.
It’s currently unknown if the transaction was an accident, or somehow intentional. The fee is currently being held by SparkPool, the Ethereum mining pool that received the fee, in case the transaction-maker wants to come forward and admit they made a very expensive mistake.
In an email to Motherboard, SparkPool said they are investigating the transaction and pointed out they have resolved cases similar to this one in the past.
“We are also further investigating [this],” said Ze Cao, operations manager at SparkPool.
In 2019, SparkPool received an exorbitant transaction fee from a sender of around $300,000. That fee was initially frozen as SparkPool investigated, and it was later determined that the fee was a mistake made by a blockchain firm based in South Korea. As a resolution, Coindesk reported, SparkPool kept half of the fee and returned the other half to the South Korean firm.
Tal Be’ery, a security research manager and cofounder of cryptocurrency wallet ZenGo, said in an email to Motherboard SparkPool freezing the transaction fee was the right thing to do.
“It also protects SparkPool from being questioned by law authorities,” Be’ery said. “In theory sender and miner can collude on this, to create a more covert way to transfer money from sender to miner by sending through fees and not through the amount as usual. So in theory it might be considered as a way to evade monitoring and commit ‘money laundering.’”
Clearly, something very odd went on with this transaction, even if it is simply a catastrophic error on the part of the sender.