What are Cross Chain Transactions and How do You Recover Them?

While it sounds complicated a Cross Chain Transaction (also known as a cross chain deposit) is both simple to understand and, unfortunately, a simple mistake to make.

A cross chain deposit is when you accidentally send one type of coin (such as Bitcoin) to a different type of coin’s address (such as Bitcoin Cash).  This often happens when sending funds between different ERC20 tokens or when a hard fork results in two crypto assets having the same format for their addresses.  Cross change transactions often happen between Bitcoin and Bitcoin Cash, as well as Ethereum and Ethereum Classic.

Imagine that Susan has two Bitcoin wallets: one that she uses to exchange US dollars to Bitcoin (we’ll call that the “Exchange Wallet”), and one that she uses to store the Bitcoin that she owns (we’ll call that the “Hodl Wallet”).

One day she decides to move 1 Bitcoin from her Exchange Wallet to her Hodl Wallet.  She starts at the Hodl Wallet and intends to request a Bitcoin address — except that she requests a Bitcoin Cash address by mistake.  She then sends 1 Bitcoin from her Exchange Wallet to a Bitcoin Cash address.

Bitcoin miners record that Susan’s Bitcoin left her Exchange Wallet.  If Susan checks the balance of her Exchange Wallet it will have decreased by 1 Bitcoin.

Bitcoin Cash miners record the deposit on the Bitcoin Cash public ledger.  If Susan checks the balance at the (Bitcoin Cash) receiving address, she will see that 1 Bitcoin Cash has been sent to that address.  But, since she doesn’t have a Bitcoin Cash wallet, she no longer controls the funds!

The Hodl Wallet shows that no deposit was sent.

New Address format for Bitcoin Cash

As of late January, 2018, many wallets and exchanges have begun to implement a new address for Bitcoin Cash which makes it harder to make a cross chain transaction.  The new format is called CashAddr, and its formal specification is here.

Who is Responsible for Recovering Cross Chain Transactions?

This is where things get complicated.  First, the person or organization that holds the private keys at the receiving address is the only entity that can help.

Second, if the receiving address was at an exchange (ex: Bittrex, Coinbase, Kraken) then your only hope is that the exchange will recover those funds for you.  That’s because exchanges typically control the private keys for the receiving addresses, and those same keys may control funds for many different accounts.  Each exchange has their own policies about if and how they will recover cross chain deposits. It’s common that (at this point in time) they simply won’t recover small transactions, and they often charge fees.

Polite persistence is probably your best friend for getting help from exchanges for small cross chain deposits.

Here are links to a few cross chain recovery policies:

As of February 2018, Coinbase won’t help their customers recover from cross-chain deposits, but people claiming to be employees of Coinbase have said that they are working on a solution to credit funds back to their clients.

We can also help you recover these funds, as long as you control the private key for the receiving address.  Please contact us if you’d like more information.

 

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