Blackmail, Money Laundering Or A System Bug? The Crypto Community Grapples For An Explanation For Two $2.6 Million Transaction Fees
Over the past two days one Ethereum user has spent $5.2 million in transaction fees, raising alarm bells across the network.
The fist transaction was an Ether transfer of $130 value on Wednesday, June 10 and it cost the user $2.6 million. A day later, the same user was charged another $2.6 million fee while trying to transfer $87,000 worth of cryptocurrency.
Transaction fees are paid to the miners who process the block. The first transfer was mined by Sparkpool and the second by Ethermine. The decentralized nature of blockchains means the unknown user will need to communicate directly with the miners to recover the overcharge.
The exorbitant transfers sent commentators reeling and sparked the generation of a slew of theories. The fact that the address overcharged was created three days before the first transfer and at the height of its wealth held $14 million worth of Ether added to the mystery.
One explanation is that the high transaction fees are simply a mistake or a bug in the system, a notion supported by the fact that the user was charged the exact same transaction fee for both transfers. Others have argued the fees could be a money laundering tactic, an explanation supported by a report from blockchain analytics company Coinfirm.
The most recent theory to hit the scene has been popularized by co-founder of Ethereum Vitalik Buterin who wrote in a recent tweet that the transaction fees may be a blackmail scheme.
The blackmail explanation comes from China-based blockchain analytics company PeckSheild and was first reported by ChainNews. PeckSheild suggested in a report that hackers gained control of an exchange’s assets. These hackers then began sending funds with the high transaction fees and demanded a ransom to stop.
PeckShield added that the exchange would have required multiple password entries to send funds which the hackers did not have. However, hackers could have avoided the passwords by transferring Ether to trusted accounts which would have been under less security. The report did not specify an exchange involved.
“The theory: hackers captured partial access to exchange key; they can’t withdraw but can send no-effect txs with any gasprice. So they threaten to “burn” all funds via txfees unless compensated,” Buterin wrote in his tweet.
Replies to Buterin’s tweet were quick to criticize the theory. One commenter argued that if this were true the exchange would have shut down to protect themselves. Buterin responded that they may have lost complete access to the key. However, that wouldn’t explain why hackers wouldn’t send funds to themselves directly.
“Hanlon’s razor: Never attribute to malice that which is adequately explained by stupidity,” the same commenter replied.
By Emily Mason