Mind-numbing errors: A look at some blunders after crypto.com transfers $10 million instead of $100

Instead of reporting it, Manivel transferred $430,000 to her daughter and even purchased a $1.35 million home in Melbourne. Manivel then transferred the ownership of the home to her sister, who lives in Malaysia. Fortunately for the exchange, the judge looking into the matter ordered the property to be sold and the remaining money to be returned, along with an interest of $27,000.

In 2021, Bitfinex, another crypto exchange, found itself in a spot of trouble. It had somehow paid a gas fee of $24 million for a transaction worth a mere $100,000. The incident was purportedly a case of "fat fingers," where an individual makes an erroneous transaction by hitting the wrong key on a keyboard.

Ironically, Bitfinex was trying to send the $100,000 worth of Tether (USDT) to DiversiFi, a decentralised exchange whose selling point is to help users avoid costly gas fees. Fortunately for the two platforms, the miner who oversaw the transaction agreed to return most of the amount.

While the first two stories have somewhat happy endings, the ones to follow do not, starting with the case of James Howells, a computer programmer from Wales. Howells unknowingly discarded a physical wallet with over 8,000 BTC during an office cleanout in 2013. Bitcoin wasn't worth too much at the time, and he decided to swallow the loss.

However, as the price of BTC escalated, Howells realised the magnitude of the mistake and has since gone to great lengths to recover the lost wallet, which he believes is at the bottom of a garbage dump in Newport, Wales.

Howells has commissioned AI-powered scanners, robotic dogs, and a team of data recovery experts to retrieve the lost wallet, which is no bigger than a thumb drive. He has also received $11 million in funding from a pair of venture capitalists to carry out the search and recover mission. He expects the activity to take nine months to a year and is optimistic about the outcome.

In January 2016, Mark Frauenfelder, the co-founder of WIRED, purchased 7.4 BTC for $3,000. A few months later, Bitcoin's value had risen considerably, so he decided to store his coins offline. He got himself a Trezor wallet and wrote down the login credentials on a piece of paper.

However, the paper was lost after a cleaning service unknowingly disposed of it while he was holidaying in Tokyo with his wife. He tried everything to recover the password, including hypnosis. However, every time he entered the wrong password, the wallet would set up a time delay before he was allowed to try again. This delay kept doubling after every unsuccessful attempt.

Fortunately, a while later, Frauenfelder received an email from Trezor regarding a firmware update. After some research, he found that hackers had discovered an exploit to crack Trezor wallets, which is why the update was being released. Frauenfelder contacted a hacker who could use the same exploit and retrieve his funds. In return, the hacker charged all but 0.85 BTC.

Back in 2010, a computer programmer named Laszlo Hanyecz bought two large pizzas for 10,000 BTC, which became the first ever recorded transaction using cryptocurrency. Perhaps he didn't think of it as a mistake at the time, but as the price of BTC shot for the moon over the years, it definitely seems like one of the biggest blunders in the crypto industry. That amount of BTC would be worth $200 million at current prices. Therefore, the moral of this particular story is that, when it comes to cryptocurrencies, it's always best to HODL. It’s better than making senseless trades/transactions that you may regret later on.

Cases of clumsy typos leading to substantial losses have become quite common these days. Another typical error is the loss of wallet passwords and credentials. For instance, Stefan Thomas, a San Francisco programmer, forgot the keys to his wallet that contained $220 million worth of bitcoins and now making peace with the loss. Small mistakes like this can lead to huge losses and reemphasise the importance of diligence when dealing with digital assets.

Also, it’s worth nothing that large companies can offer substantial amounts of money as an incentive to retrieve the funds. People also willingly return funds to such firms, afraid of their clout and the potential repercussions. However, for smaller individual investors, the odds of retrieving lost funds is next to zero.