- Venezuela’s Maduro Regime Targets Cryptocurrency Remittances to Finance Itself
- Avnet and Bitpay Partner Up to Enable Cryptocurrency Payments
- Bitmain Claims its New Miner Z11 Is 3x More Powerful Than its Predecessor
- Digitec Galaxus Becomes the First Swiss Online Retailer to Accept Cryptocurrencies
- The Winklevoss Twins Don’t Seem Bothered by the Crypto Winter
Ethereum (ETH) was launched in July 2015 and it is the second largest cryptocurrency by market capitalization after Bitcoin. Ethereum has received a lot of buzz lately due to it being a well-established decentralized platform that allows smart contracts and speedy transactions often leading it to be dubbed Bitcoin 2.0. It is no surprise then that Ethereum is a popular choice for buying crypto; however, it looks like one unlucky user was stung by an extortionate transaction fee.
One user was charged a $311,577 transaction fee for sending 0.1 Ether worth $14.84. This is of course outrageously high and abnormal, leading people to ask what exactly happened here?
There have been allegations of money laundering since the same wallet has a couple of high fees that all went to the same miner. The odds of this happening randomly are extremely low. It is not yet clear what exactly happened; however that doesn’t stop people from speculating on social media. Whatever happened, even if it isn’t money laundering, this incident doesn’t shine Ethereum in a good light since it still highlights the potential for money laundering if users have the right skillset.
If money laundering is at play here, it is fair to say that some stringent measures will need to be put in place to ensure this type of activity cannot occur in the future.
Reddit User bitcoinsSG said:
“Can this be a clever way for a miner to cook the books in terms of their mining operation? Would it benefit a miner if they saved such a deliberated transaction till when they mine a block, after all, if they are the ones mining it, all the money would come back to them?”
This seems to be a popular opinion on Reddit and Twitter where users think the transaction is so suspicious that money laundering is the only answer that we can have a degree of confidence in.
When asked how this type of money laundering was possible since we would expect that a miner can’t choose which transaction to mine user JPaulMora said:
[Is the process random?]
“Yes and no, miners can choose what transactions to include on each block. This is why higher transaction fees will include your transaction faster.
On this case, we assume it’s the miner paying himself because you don’t just give away 2100 ETH on fees, at least not multiple times.
The part that is random requires some basic knowledge of how transactions work: a valid block includes (at least):
the previous block hash
the included transactions’ hashes
this info is usually just concatenated together and then hashed. The randomness comes from how fast I am finding a solution for this block that is, whether this particular combination of hashes has a solution in first place
My guess is, this miner is only broadcasting these transactions to himself (to prevent other miners from taking the fee), having high hashrate would also help, cause he’d have multiple tries a day, though not required.”
The identity of the user and/or miner has not been identified which could give more credence to the allegations of money laundering. We can assume that a money launderer wouldn’t want to be identified. However, it is still possible that the person charged an extortionate fee is simply a victim of an ETH transaction gone awry.