The "error" is someone significantly damaged it. Looks like it's been through a lot. You can normally take these to your bank and exchange it for one that isn't so damaged. The problem is coinage goes into circulation and people do everything to it that you can't believe. In my past work I used to actually use coinage as buffers instead of blank pieces of metal which cost money and are thrown away, versus coins which if they get heavily damaged were always worth face value.
Heat damage. Zinc melts just below 800F, while copper melts at a much higher temp. You can easily reach that temp on a gas stove (But I strongly recommend not testing it, molten zinc doesn't play well with stove tops ) It looks like someone was holding it with something like needle nose pliers over a flame.
