EOS Block Producers Freeze User Funds to Prevent Theft, Resulting in Twitter Backlash

EOS has frozen seven accounts compromised by the registration process through phishing scams, according to a Steemit post by EOS42, an EOS block producer (BP) candidate.

The news, published on June 17, has led to backlash based on allegations that the BPs have violated their own constitution.

After the public learned of the account freezings, crypto enthusiast Nick Szabo referred to the EOS constitution as “socially unscalable and a security hole:”

In EOS a few complete strangers can freeze what users thought was their money. Under the EOS protocol you must trust a "constitutional" organization comprised of people you will likely never get to know. The EOS "constitution" is socially unscalable and a security hole. https://t.co/WusEqBMGBp

— Nick Szabo⚡️ (@NickSzabo4) June 19, 2018

The impetus for the account freezing came from the EOS911 initiative, created by EOS42, that is designed to help the victims of EOS phishing attacks and those with compromised private keys.

EOS Block Producers discussed the decision to freeze the accounts over a two hour conference call, ultimately deciding that since the EOSIO constitution has not yet been ratified, they could ignore the EOS Core Arbitration Forum’s (ECAF) decision not to freeze the funds.

The fact that a decision could be made by a small number of players on a conference call has led to several crypto influencers on Twitter bringing up questions about EOS’s decentralized format.

Bitcoin (BTC) advocate Charlie Shrem tweeted yesterday that “this is the point of crypto, no one should have that power,” in reference to the idea that “punishing” people is needed in the crypto space:

“Protecting” “punishing”. No. No one gets to decide those things. You are hair swapping 1 nation state for another one, albeit a digital one. This is the point of crypto, no one should have that power. If you do, then we should just stop wasting everyone’s time. https://t.co/yCh6IIPGqp

— Charlie Shrem (@CharlieShrem) June 18, 2018

Another Twitter user, @econoar, tweeted that you “can’t even make up comedy this good” about the EOS freezing saga:

Some randomly elected 3rd party arbitrator is now making “orders” to #EOS block producers. In this case, regarding locking user accounts. Can’t even make up comedy this good. pic.twitter.com/Dfs7UH0f5T

— Eric (@econoar) June 19, 2018

EOS New York defended the Block Producers’ decision in a Steemit post Tuesday, June 19, noting that the ECAF’s refusal to act made the Block Producers take on the role of both the “executive” and the “judiciary,” leading them to make the “difficult decision of executing based upon the evidence brought forth.”

EOS New York importantly notes that this is “not what Block Producers are meant to do,” adding they they froze the accounts in the “spirit of the governance system we as a community seek to create, despite it being formally absent.”

The ECAF has since requested that the funds continue to be frozen, with EOS New York writing that unless the ECAF submits formal ruling on the case by today at 1300 UTC (9:00am EST), the funds will become unfrozen.

EOS completed their year-long, $4 billion initial coin offering (ICO) at the beginning of June, launching their mainnet on June 15. Two days after the launch, the EOS mainnet was reported to have “paused,” resuming after about four hours when the technical problems had been resolved.

At press time, EOS has not responded to Cointelegraph’s request for comment.