The ETH Transaction Fee Mystery

This week 2 ETH transactions have confused the crypto sphere
Mistake or money laundering?
Crypto and Bitcoin Market Cap Story of Day

Crypto and Bitcoin Market Cap Story of Day

CRYPTO MOVERS AND PRICES

 

 

 

Crypto wasn't immune to the broad-based sell-off in risk assets yesterday and is generally weaker this morning. Spot volumes have seen a relative spike and are now 2.2x the 30-day average.

CRYPTO STORY OF THE DAY

This week 2 ethereum (ETH) transactions have confused the crypto sphere. Over a span of several hours, across late Wednesday and early Thursday, 2 separate transactions from the same Ethereum address sent less than USD 200 of ETH, while paying in excess of $2.5 million in transaction fees. Initial theories of why or how this occurred all seem insufficient so far

Sparkpool and Ethermine pools processed these transactions. Both miners have shown a willingness to work with the owner of the address, with Sparkpool going as far as freezing the funds and calling on the owner to reach out. Several theories have circulated crypto media sites, including money laundering. Alex Manuskin, blockchain researcher at crypto wallet ZenGo, theorized that the”explanation could be a mix in the bot code between the sent value and the gas price.” Manuskin came to this conclusion given that the “sender used to send a transaction every 1 minute or so…” suggesting the use of automated software.

Initial speculation that this was some kind of money laundering attempt was debunked when the miners spoke out about working with the ETH sender. Furthermore, the amount of attention the transactions have received would make this a weak attempt at covering up funds. The most likely scenario now is that it was some kind of mistake. Ethereum Founder Vitalik Buterin tweeted, “Definitely a mistake. I'm expecting EIP 1559 to greatly reduce the rate of things like this happening by reducing the need for users to try to set manual fees.” That said even the “mistake thesis” is strange. The sender in that case wouldn’t have appeared to notice that this had even occurred in spite of all the attention and willingness of the miners to come to some resolution. Overall a confusing situation we expect we'll hear more about in coming weeks.

 

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets.