Justin Sun, Binance, Huobi, & Poloniex Hostile Takeover Steem Network To Prevent ‘Hack’
- Steem hackers defeated and funds are SAFU – Justin Sun who acquired Steemit
- The witnesses say Sun and exchanges used users’ STEEM to take over the blockchain
- Binance CEO CZ knew beforehand of the hard fork and approved but will now unvote
- EOS co-founder and Steemit co-creator Dan Larimer says this power struggle demonstrates just how decentralized it is
Tron founder and BitTorrent CEO Justin Sun took to Twitter today to share that his recently acquired STEEM has “successfully defeated the hackers & all funds are super SAFU.”
Sun explained that some malicious ‘hackers' froze 65 million STEEM legally owned by Steemit and the core developers. According to Sun, the hackers already hijacked $10 million dollars worth of STEEM and “threatened to nullify the existing STEEM.” But the community members and witnesses/validators said,
“Exchanges used USERS funds to vote in witnesses to try a hostile takeover. They powered-up the users funds, without consent and now they are trying to add a quicker power-down so they can get funds back to their users.”
Who are the Hackers Exactly?
According to “An Open Letter to the Community,” on Steemit “for the next 4-6 weeks, the voting rights to resume the order of the community while having an open channel for meeting community members and Witnesses.”
This is a giant lose-lose situation.
Choose option 1 and you'll face the wrath of the community.
Choose option 2 and you might be hard-pressed to pay out if large STEEM holders band together and withdraw funds collectively.
Utter nightmare to deal with and a major slip up.
— DonAlt (@CryptoDonAlt) March 3, 2020
Such an update in a delegated proof-of-stake (DPoS) is possible only by using enough of the cryptocurrency STEEM for the new set of blockchain validators. In the current case, exchanges staked the STEEM they control, seemingly their users’ to vote for a new leader.
The “hackers” were community elected block producers. Justin collided with exchanges to stake user funds to vote in sock pocket BPs to overturn community consensus.
You tell me who looks like the hackers. pic.twitter.com/tvJqEP5RLC
— TheycallmeDan (@TheycallmeDan_) March 3, 2020
Sun collaborating with exchanges for a “hostile takeover” of STEEM is “misleading and false” said the Tron founder.
“Our sole intent was to secure Steemit’s stake & STEEM holders’ interest. Our intention was not to control the STEEM network,” said Sun, adding that they are committed to withdrawing the votes.
The hostile take over of $STEEM only tells you how hypocritical SUN is and why DPOS as a consensus layer is non-resilient
All previous “trolls” from core Bitcoiners are being taken advantage, reframed into “strategic partnership” onto his Chinese social media btw 🤷🏻♀️ shameless pic.twitter.com/vbB4JqaYNZ
— Dovey 以德服人 Wan 🪐🦖 (@DoveyWan) March 3, 2020
However, Luke Stokes, a STEEM witness/validator said, Sun’s “stake in Steem on centralized exchanges was just used to take over the Steem Blockchain.”
Nothing to See Here, It’s just a Hard Fork
Now, all of the 20 new validators that work in the same role as the bitcoin’s miners, are accounts that were created just last month.
Binance, Huobi, and Sun owned Poloniex staked tokens they control to vote for new witnesses overnight. A tweet shows that in a total of 45.6 million Steem power in various exchanges was used to do this.
Then by creating a new version 22.5 of Steem software, they released the token controlled by Steemit that flowed into exchange accounts and used to increase their vote for new leaders.
In response to this Changepeng Zhao “CZ” announced that he was made aware of the hard fork “beforehand” and approved it because “projects do this all the time, and we are usually just in a supportive position.”
A few hours later he announced that he has unvoted and the exchange will stay neutral.
Done, unvoted. 1 oversight on my part. Miscommunication/upgrade rubber stamp. 2 @binance have no interest in chain governance. We stay neutral. 3 will continue to support regular upgrades/hard forks.#onwards https://t.co/RQFlul9FTz
— CZ Binance 🔶🔶🔶 (@cz_binance) March 3, 2020
In the light of this latest incident, two for the blockchain developers at Steemit and Head of Communications have resigned from their positions.
Power Struggle = Decentralization
Steem was created by EOS co-founder Dan Larimer who said,
“I for one welcome this power struggle on STEEM because it demonstrates just how decentralized it is by requiring more participants to cooperate than mining pool operators.”
Last weekend, just days after Sun’s Tron Foundation acquired Steemit, the people running the Steem blockchain executed a reversible soft fork to stop one of the largest STEEM tokens from voting.
Stokes explained the mechanism of the takeover on YouTube.
STEEM which is down 98% from its all-time high is currently in the green while trading at $0.182.
This incident is not only a moment of truth for just how secure the Proof-of-Stake (PoS) blockchains are but yet again puts “not your keys, not your crypto” fact in the limelight.