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Cryptocurrency trading platform Crypto.com sent by error $10.5 million to an Australian lady while processing a $100 refund and was unaware of the oversight for seven months! If you are asking "how on earth is this possible?" This happened by entering by error the recipient ID in the field of the refund amount... a simple data entry error costing millions.
Certain media jumped to the conclusion that judging the immaturity of the cryptopayments industry, however such mistakes are common in the payments industry: Citibank unintentionally wired out about US$900 million and paid off a borrower's debt early - with Citibank's own money - in August 2020. PayPal refunded presumably the historic world record of payment error when it sent US$ 92,000,000 billion ($92 quadrillion) to an American making him for a day richest man in the universe.
Depending on the nature and the payment topology, it is most of the time impossible to reverse a classical electronic payment as it is by default impossible to recall a cryptocurrency payment as well. In February 2022, Crypto.com was granted permission to freeze Manivel's Commonwealth Bank account after filing a lawsuit in the Victorian supreme court. However, most of the money had already been moved to other accounts, which were subsequently frozen. Finally the judgment released on Friday ordered the Australian lady to pay Crypto.com $1.35 million, sell the property, and pay interest of $27,369.64 and costs.
Such payment errors are usually due to the customer entering incorrect account details (83%) compared to ‘customer selected wrong payee’ (17%). In general only ~75% of the monetary value of mistaken payments are recovered for the customer. This is an important competition area for innovation between cryptopayments and electronic payments. Blockchain can be used to prevent such errors from happening in an automated way thanks to cryptography, smart contacts programmable money, escrow services. Bitcoin Lightning network is by design implementing technics that can help fight such payment errors. These issues also shed the light on the importance of regulation in general to protect the customers and retailers as well.
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