Binance Publishes Apology Letter to Steem Community and Says It Has ‘Unvoted’

Published at: March 10, 2020

Cryptocurrency exchange Binance has officially apologized to the Steem community following its involvement in a major centralization scandal involving Tron founder Justin Sun.

In its letter posted on March 10, Binance affirmed that it “stays neutral and has no interest in on-chain governance beyond the Binance ecosystem.”

Binance also provided records of its powering down of all the 31,730,000 STEEM tokens it had staked in support of Justin Tron’s allegedly “hostile takeover” of the blockchain.

Steem vs. Tron controversy: the backstory

Binance’s letter comes following a stand-off earlier this month between members of the Steem community and Tron CEO Justin Sun, who acquired — or “strategically partnered with,” as it was later presented — Steemit in February of this year.

Steemit is an app on the Steem blockchain, a Reddit-like social media platform, which uses a consensus mechanism called delegated proof-of-stake. This protocol means that the blockchain is governed by a set number of “witnesses,” elected by STEEM holders, whose voting influence is proportional to the number of tokens they hold.

Following news of Sun’s apparent acquisition, the Steem community orchestrated what it called coordinated and preemptive “due diligence” to soft fork the blockchain in order to deactivate a major stake — known as the “ninja-mined stake,” which is owned by Steemit.

The ninja-mined stake comprised roughly 74 million tokens and the community feared that Sun would be in a position to wield excessive control over the platform if he were now to able to dispense of the voting rights attached to a stake of this size.

Sun responded to the soft fork by controversially declaring it to be a “criminal” action by “malicious hackers” and enlisted three exchanges — Binance, Huobi and Tron-owned Poloniex — to vote the STEEM tokens deposited by their own users to vote for a hard fork that would reverse the community’s action.

The letter

In the furor that followed, Binance’s CEO Changpeng Zhao has since claimed that Binance believed it was staking the tokens in favor of a regular upgrade/hard fork. In today’s letter, the exchange upholds this line:

“We hold a supportive position of normal upgrade/hard fork and will continue to do so in the future.”

In addition to providing evidence that it has now “powered down” all of the voted tokens — on March 8 and 9 respectively — Binance wrote:

“Hopefully, the Steem community and TRON will reach a consensus in an efficient manner. If they fail to reach an agreement and it poses potential risks/damages to STEEM users on Binance, we reserve the right to take corresponding actions at the consent of our users.”

Binance did not immediately respond to Cointelegraph’s request for comment. This article will be updated should they respond. 

Huobi has also announced that it removed its vote, whereas Tron-affiliated Poloniex is yet to comment on the incident.

Tags
Business
Cryptocurrency Exchange
Binance
Huobi
Justin Sun
Tron
Poloniex
Steemit
Related Posts
Binance Reverses Vote in Apparent Steem Takeover, Steemit Comms Head Resigns
On March 3, Binance CEO Changpeng Zhao announced that the exchange had removed its votes that contributed to a sudden shift of control over the Steem blockchain. Earlier today, leading exchanges Binance, Huobi, and Poloniex came under fire for allegedly mobilizing customer deposits to vote in what has been described as a hostile takeover of popular crypto blogging platform Steemit. Steemit’s native blockchain Steem uses a proof-of-stake protocol — where a small number of “witnesses” are voted on to secure its network. Votes are allocated according to the number of tokens that an individual holds in their wallet. Steem’s witnesses …
Blockchain / March 3, 2020
Justin Sun Accused of Bribing His Way to the Top of the Steem Hierarchy
Major Steem stakeholder Dan Hensley has levied heavy accusations at TRON founder and CEO Justin Sun. According to Hensley’s April 8 writeup, Sun “bribed” his way to the top of the Steem hierarchy with “money, power and users.” As Cointelegraph reported in early March, Steem was the subject of what many supporters deemed a hostile takeover by Justin Sun. Hensley’s latest allegations shed new light on how the TRON founder allegedly influenced prominent Steemians into doing his bidding. A TRON representative declined to comment on this story. In a conversation with Cointelegraph, Hensley described Sun’s intention to circumvent established community …
Altcoin / April 13, 2020
How the Steem Saga Exposes the Dangers of Staking Pools
Over the last few days, the centralization versus decentralization row has erupted in earnest. In case you missed it, the activities of Tron founder Justin Sun following his takeover of blogging site Steemit have been pivotal to the controversies. Let’s briefly recap. Earlier in February, it emerged that Sun was further expanding his crypto-empire with the acquisition of Steemit, which runs on the Steem blockchain. Steem was developed by Daniel Larimer, who also introduced the delegated proof-of-stake governance model, or dPoS, to the blockchain sphere. Larimer later went on to build EOS, which also runs on dPoS. Related: Steemit Managing …
Blockchain / March 10, 2020
Huobi Withdraws Steem Votes, Admits to Mobilizing Customer Funds
Four former witnesses have been voted back onto the council of 20 nodes that underpin the Steem blockchain. Their reinstitution follows the withdrawal of votes from major exchanges Binance and Huobi in support of what has been described in an attempted takeover of the network. In a statement issued by Huobi on March 3, the exchange admitted that it had mobilized its customers’ STEEM holdings to vote in favor of ousting the blockchain’s previous validators in favor of Tron founder and recent purchaser of Steemit Inc, Justin Sun: “From time to time, Huobi stakes user holdings to help block malicious …
Blockchain / March 4, 2020
Huobi and Binance Support Community-Led Steem Hard Fork
Major cryptocurrency exchanges Binance and Huobi have announced support for the Steem (STEEM) community’s hard fork to create the new Hive network. On March 18, Binance and Huobi published announcements revealing their support for the Steem hard fork that is scheduled for March 20. The decisions appear to quash allegations from earlier in the month that the exchanges were coordinating with Justin Sun in his apparent attempted takeover of the Steem network. Binance and Huobi support Hive hard fork Both exchanges will take snapshots of STEEM account balances at 2 PM UTC, and both exchanges will suspend STEEM deposits and …
Blockchain / March 19, 2020