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According to Come-From-Beyond in the emails send to DCI:

The Coordinator is used as an extra protection measure. Particularly, it stores all transactions that reach it, this allows us to recover iotas sent to addresses with typo (we detect it because users usually publish the addresses on the tangle before usage).

If a transaction is sent to an address and then a user sends a transaction with a typo, how will the foundation determine that it is a typo and not a legitimate spend?

What are the criterias for 'typos' with the IOTA Foundation? Are there addresses that users can send IOTAs to that can never be recovered from (ex. burner addresses)?

How is the transaction reversed and how are other users and exchanges compensated for any downstream changes to their balances as a result?

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  • If you know how to generate address ABCDE but iotas were sent to ABCDF then it's enough to detect a typo with high assurance. Aug 29, 2018 at 16:47
  • I'm not aware of cases with more than 1-tryte typo. Truncation wasn't allowed on client level. All txs were available, even after snapshots. Aug 29, 2018 at 19:49

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You are asking about undocumented and closed source behaviour. I can only explain how the open source part of IOTA works and make assumptions and draw conclusions about their consequences to the closed source part.

How does one know that it‘s not a legitimate spend?

You can publish your Iota address to the Tangle by making a 0-value-transaction with it.

  • Your address is ABCO9ZDEF....
  • You publish this address.
  • Someone sends Iotas to BBCO9ZDEF...
  • it is close to impossible that another address similar to yours exists

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