The latest snafu for the exchange Bitfinex adds drama to a company with a track record of having to pay out for regulatory settlements.
Asad Gillani reports Bitfinex mistakenly sent $23 million worth of Ether to a miner, instead of the $100,000 worth of cryptocurrency that individual was supposed to receive.
The owner of block 13307440 (you can see all of the pertinent details at Etherscan) reportedly had a conscience, eventually returning 7626 of those 7676 transferred Ethers.
“With all the exploits and hacks in the crypto industry, it is shocking that some players have remained sincere,” Gillani writes. “Many exchanges have already lost considerable sums to criminals, and while some get refunded, others don’t.”
However, in this case, where the recipient was a passive bystander and not a hacker, there is a discrepancy – with one Ether coin at around $3000 today, the miner will be holding $150,000 or in other words, an extra $50,000, as an ostensible “finders keepers” fee.
As for the context of Ether transactions in general, users are balking at high gas fees of $45 per transaction, according to Gillani’s report.
The latest liability described above is not the only imbroglio Bitfinex has had to deal with in the last several years: Earlier this year, the exchange agreed to pay a settlement of $18.5 million after a legal challenge by the New York State Atty. Gen.’s office over claims that the exchange lost $850 million in collaboration with stablecoin Tether.
“New York Attorney General Letitia James’ office says it found that Tether sometimes held no reserves to back its cryptocurrency’s dollar peg,” wrote Ryan Browne at CNBC. “It said that, from mid-2017, the company had no access to banking and misled clients about liquidity issues. In a 2019 filing, the attorney general’s office said that Bitfinex handed $850 million to a Panama entity called Crypto Capital without disclosing it to investors. Executives at Bitfinex and Tether then allegedly engaged in a series of transactions that opened up Tether’s cash reserves to Bitfinex.”
What do you think of this latest mix-up? How can stakeholders avoid these kinds of off-the-cuff problems?