6 ‘fat-finger’ mistakes that hit crypto holders in the wallet

The infamous “fat-finger” error is a humbling reminder that the crypto sector is still vulnerable to human goof-ups, no matter how futuristic crypto feels.

A fat-finger error is a mistake in which a user accidentally inputs incorrect information when sending/selling/receiving crypto, typically due to a typing mistake. This can result in massive losses or miscalculations.

Common mistakes include adding an extra zero (or two) or accidentally sending one’s entire savings to the wrong wallet.

Fat fingers aren’t just a crypto thing. In 2018, Samsung Securities made a fat-finger mistake when instead of paying its employees 1,000 Korean won ($0.72) per share in dividends, it mistakenly paid them 1,000 Samsung Securities shares instead.

The error distributed 2.83 billion shares, worth about 112.6 trillion won, or $150 billion. The majority was retrieved, but some employees tried to sell their shares, sinking Samsung Securities’ stock price. The incident created a dispute among investors, regulators and their employees.

One key difference with crypto, however, is that transactions are immediate, irreversible and anonymous, leaving participants with limited options to reclaim an erroneous transfer. Furthermore, unlucky mistakes are visible to anyone on public blockchains.

From hilarious mix-ups to costly mistakes, here are six notorious crypto fat-finger moments.

Crypto mix-up recipients go all-in on millionaire lifestyle

In May 2021, Crypto.com mistakenly sent 10.47 million Australian dollars ($6.86 million) to Australian couple Thevamanogari Manivel and Jatinder Singh instead of issuing a 100 AUD refund.

The error occurred when an employee allegedly entered an incorrect account number into the payment section of an Excel spreadsheet.

When the exchange discovered the mistake during a December 2021 internal audit, Singh had already purchased multiple homes and gifted a friend 1 million AUD (roughly $660,000), claiming he thought he had won “an online raffle.”

However, Singh’s claim appeared to be a blatant attempt to lie his way out, as Crypto.com compliance officer Michi Chan Fores firmly denied the existence of any such promotion.

The couple’s millionaire honeymoon ended after both pleaded guilty to theft charges. Singh was sentenced to three years in jail, and Manivel was placed on an 18-month community correction order with no jail time.

County Court Judge Martine Marich explained her decision to sentence Singh to jail, saying that although he pleaded guilty, he continued to blame Crypto.com and the Commonwealth Bank for the mistaken funds. Marich also acknowledged Singh’s cognitive challenges, including an “extremely low” IQ, which hindered his ability to fully grasp the legal repercussions of his actions.

$23.7 million gas fee blunder finds a kindhearted miner

In September 2021, a small decentralized finance (DeFi) trading platform called DeversiFi, since rebranded as Rhino.fi, erroneously paid a $23.7 million fee for one of its transfers.

The user intended to pay a nominal gas fee, but a software technical error resulted in the exorbitant fee. According to a post-mortem, issues with the EthereumJS library coincided with gas fee changes from the EIP-1559 upgrade, which led to the extremely high transaction fees.

However, DeversiFi was in luck, as the miner who received the fee refunded the total amount.

Thanks to the Ethereum blockchain’s inherent transparency, the DeversiFi team was able to track down the miner of block 13307440, where the mistaken transfer took place. The miner had a routine of depositing Ethereum to Binance, allowing the team to reach out via the crypto exchange.

Within an hour, the team could breathe a sigh of relief as the miner returned the total amount, minus 50 ETH (worth around $190,000 at the time), which DeversiFi gladly offered as a reward.

But not everyone is so fortunate, as sometimes anonymity can tempt crypto users into greed.

DeFi bug hands out $90 million in COMP tokens

In October 2021, a bug in an update to the widely used Compound Finance DeFi protocol sparked an outrageously generous airdrop to users.

The issue stemmed from a small code error that resulted in the misallocation of funds, enabling users to claim $90 million worth of COMP tokens.

Compound Finance is a protocol that allows users to lend their crypto holdings in exchange for interest. However, the protocol malfunctioned and sent some lucky users millions of dollars worth of COMP tokens.

Despite public pleas from the protocol and founder Robert Leshner’s threat to report uncooperative recipients to United States tax authorities, some users chose to sell their stash rather than return the tokens.

Leshner explained how powerless the company was, as there were no admin controls or community tools to disable the COMP distribution.

700 BTC promo makes temporary millionaires

In May 2021, digital asset lender BlockFi mistakenly offered one of the most generous promos in the crypto industry.

BlockFi set up a promotion with stablecoin Gemini Dollar (GUSD) where a bonus would be paid to certain customers. The promo would give users additional benefits for maintaining a certain balance of dollars in their BlockFi interest accounts.

However, due to a fat-finger error, instead of sending GUSD, BlockFi mistakenly sent Bitcoin to some users, with a few receiving up to 700 BTC.

While most of the crypto transactions were reversed, some 100 customers were able to sell the accidental Bitcoin.

The firm was still in hot water, however, as according to some users on its official Reddit page, the company accused users who neither engaged with nor intended to sell the Bitcoin of wrongdoing and threatened legal action.

One user wrote, “Blockfi messed up. […] 2 days after their blunder, I made a withdrawal […] completely unrelated to their claim. Now they send me an email accusing me of withdrawing funds that aren’t mine saying its fraud and a crime they will act on if not returned,” adding:

“Fuck you, it’s my money.”

BlockFi’s mistake left a lasting reputational stain that was difficult to repair. The firm declared bankruptcy in November 2022.

Suspicious fat fingers

When thinking about a fat-finger incident, one generally imagines a mistake, but sometimes, these “accidents” are done on purpose as a sophisticated form of money laundering.

A common modus operandi is to “mistakenly” overpay a lofty gas fee for a transfer, as may have occurred on Aug. 12 when an unknown user spent $90,000 in gas fees for a simple transfer of $2,200 in Ether.

The technique requires the user to collaborate with the validator of the given transaction to ensure they submit the fee payment in the correct block.

In an October 2023 report, crypto staking firm Northstake found that illicit and high-risk activity on three Ether staking protocols and certain areas of the mainnet ranged between 0.46% and 1.56%.

Although this figure seems relatively low, Northstake said it’s high enough to raise a red flag for financial institutions that were considering getting involved in staking.

Standard clumsy fat-finger mistakes will always exist

While millionaire fat-finger incidents often grab headlines, minor accidents occur frequently and fly under the radar.

The NFT art collector PrincePablos thought he bought an NFT for 0.021 BTC, worth about $1,287. However, the surprise came after the transaction when the trader realized that the NFT was listed for 0.21 BTC (roughly $12,877).

PrincePablos might not have been aware of what he was getting into, but he and his NFT are now famous as a cautionary tale. The prince made it — he’s officially a fat-finger celebrity.

Source: https://cointelegraph.com/news/fat-finger-mistakes-crypto-holders-wallet