- Two Ethereum transfers have chalked up a $5.2 million transaction bill
- Discussion over whether it was an accident, a big, or money laundering
- Three possibilities, each with potentially huge ramifications
Two Ethereum fees of a combined $5.2 million on transactions worth just a few hundred bucks have lit up the crypto world, with the reasons behind them causing huge debate. Were these mammoth Ethereum fees an accident, an attempt at money laundering, or a bug in Ethereum’s network? We analyze the options and see what is the most likely.
Another over 10K $ETH transfer fee in 24hrs .. pools usually will freeze such fund and try to return it, which is not necessary but out of business courtesy
But 2 times in a row makes me think this might be some ETH whales try to flex 💪?
like tipping $1000 for a $20 🍔? https://t.co/etzrSkBFF8
— Dovey 以德服人 Wan 🪐🦖 (@DoveyWan) June 11, 2020
Most Ethereum wallets allow you to set the gas fee, with a higher fee giving you higher priority. In the past this has resulted in so-called ‘gas wars’, no more evident than during the 2017 ICO craze where contributors would pay higher and higher gas fees in order to get into an ICO before the cap was filled.
It is therefore possible that the sender of these multimillion-dollar transactions is setting his or her own gas fees and getting the figures hideously wrong, losing some $5 million in the process.
Money laundering and cryptocurrency are no strangers to each other, and using miners to facilitate the practice is nothing new. Transactions fees exceeding the value of the transaction itself are not common and not necessarily an indication that criminal activity is taking place, although consistently higher transaction fees, especially ones that are routed through a single mining pool, are more suspicious.
Mining rewards are seen as ‘clean money’ and the proceeds of legitimate companies which can be easily explained on a company tax return, so a mining pool could assist a nefarious party in washing their dirty coins by finding a legal way to get the money to them and taking the transaction fee as legitimate earnings.
Ethereum Network Bug
If the transaction wasn’t an error and wasn’t a criminal act, could it be a bug in the Ethereum network? Could the network have done what all computers do now and again and experience a glitch, or had a temporary moment of madness and grossly miscalculated or grossly misrepresented a transaction figure?
Blockchain technology is designed to prevent issues like individual anomalies, but nothing is perfect, and with the amount of work going into Ethereum 2.0 is it possible that someone took their eye off the ball and let an incorrect transaction fee go through?
Huge Ethereum Fees Likley an Accident by an Exchange
The answer is almost certainly that the huge Ethereum transaction fees are the result of an accident or bug from the sender’s end, not an issue with the Ethereum network and not an audacious attempt at money laundering. The Ethereum network is tried and tested and would not fail in just two isolated instances, while laundering over $5 million through a couple of hundred dollar transactions is the best way to bring the heat to your operations.
We are therefore left with the likelihood that these huge transaction fees are errors on the sender’s side. The amount of ETH sent (over 10,000 on each transaction) wasn’t a misrepresentation as the blockchain confirms that this amount went through, which means it was definitely inputted at the user’s end. It is also to be assumed that this wasn’t human error but an error in a computational output which wasn’t corrected in time for the second transaction to go out.
Given the amount of ETH involved the most plausible explanation is that an exchange’s transaction algorithm has gone one a bit of a spending spree, with the mining pools likely to return the fee once the sender has been properly identified. However, if the huge Ethereum fees were both human error, someone might be out of a job today…