Justin Sun & Friends vs Decentralization. Steemit Hostile Takeover Report
In the light of recent events that involve some of the “biggest” names in cryptocurrency, I have felt the need to put together a chronological report of the biggest event in Cryptocurrency to date.
Hopefully, this will help everyone understand the scale and significance of the actions taken by Justin Sun and the exchanges that participated in these acts against decentralization.
Due Diligence
February 24th, 2020- A report comes out that confirms Justin Sun has acquired Steem Inc. Immediately after the purchase, the Steemit community comes out with concerns regarding governance of the platform.
His acquisition came with a stack of pre-mined or “ninja-mined” STEEM tokens that were meant to be used for platform development as stated in this Forbes article. Although there is no signed document that would back these claims, it was to be understood that these funds will not be used for voting on the platform.
More information on this subject can be found here.
As a safety measure, the community locks the tokens with a soft-fork until a meeting is held with Justin Sun and TRON representatives. The lack of due diligence performed by JS and TRON convinced them to see this as an intentional lockup of their funds and a threat to their investment.
As a response, three exchanges (Binance, Poloniex, and Houbi) send user funds to Steemit accounts owned by JS and TRON, convert Steem into Steem Power and overtake the governance by force.
Sockpuppet accounts now have control over the voting system, and TRON plans a hard fork that would enable a power-down period of a few days so that the exchanges can pull back user funds. This is all happening after JS and other participants realized that Steemit has a power-down period of 13 weeks and that they can’t proceed with the original plan.
Retaliation
As it turns out, the 13-week power-down period was put into place to prevent such events from happening in the first place. After the Steem community regained control of the chain, TRON’s intentions became clear during the first meeting between the top 20 witnesses and Justin Sun. A short summary of their requests can be found here or by listening to the entire recording of the meeting here.
In short, Justin Sun’s main request was to remove the lock from ninja-mined funds and to allow exchanges to power down a lot faster so they can get their user’s STEEM back. The community raised concerns about this and questioned the agenda behind this request.
Why would exchanges have the privilege of powering down 4–5 times faster than regular users when the 13-week power-down period was put in place to prevent exchanges, or any other entity, from participating in votes and then withdrawing their tokens with no repercussions?
If you listen to the whole debate you will easily come to the conclusion that JS does not understand what he bought and why the community doesn’t want to allow this hard fork. At the end of this meeting, it was clear that his only request (for now) is that exchanges get their tokens back. The urgency is understandable since Binance has over 30 million STEEM tokens locked on the platform and more tokens are added to the account constantly.
Source — https://steemitwallet.com/@binance-hot/transfers
CZ then confirms Binance’s involvement in the incident.
Afterward, he promises to unvote sockpuppet accounts and remove his centralized exchange from this incident. Apparently, he is also unaware of the power-down procedure at that moment.
Justin Sun follows up with an announcement that Steemit was apparently under attack and this hard fork was meant to keep it safe from “hackers”.
The full thread can be found here — https://twitter.com/justinsuntron/status/1234690483298820097
What he fails to mention is that these hackers are actually community witnesses that were trying to prevent the misuse of pre-mined funds and a hostile overtake of their blockchain. While TRON and JS did buy Steem INC, they did not purchase the rights to own the Steemit blockchain and community.
The Aftermath
Once the damage was done, and the Steem community has regained control over their blockchain they have had multiple failed attempts to reason with JS and his team. Despite the efforts, TRON owner and CEO did not understand why he can’t use pre-mined funds as he pleases while CZ was having issues of his own.
First, he was playing the “lol I had no idea” card but after the story caught fire and he realized that user funds are indeed on lockdown, it seems like he had a nervous breakdown.
Why “Pomp”, ETH and Vitalik were mentioned in this tweet remains to be seen.
The tweet was promptly deleted and the covering of tracks began with a fake BTC treasure hunt.
Both CZ and Binance retweeted an apparent treasure hunt that was held by Binance Academy but, as many Twitter users reported in the comments, the wallets were empty before the hunt started.
I have been able to track down two winners that seemed to have the same enthusiasm and message after claiming the free BTC.
One comment was found below the CZ retweet even though every wallet was empty for over an hour, while the second one was found in the Binance Academy thread.
Great minds think alike I guess.
While the whole Steem community was asking questions about the token lockup and further moves that will be taken by Binance, CZ was busy explaining how his centralized exchange is under attack.
Speaking of temporary glitches, this centralized exchange seems to have unscheduled maintenance every time LINK hits a new ATH. More info on that can be found here.
STEEM withdraws have been disabled on Binance and their support has no clear explanation for the situation.
It seems to be impossible to cancel STEEM orders on Binance as well.
On the other end, Justin Sun was having similar problems.
TRON accounts on Steemit were giving out downvotes left and right on the platform while at the same time, JS was calling for the removal of that feature.
After he was done with the research he should have conducted before his investment, he came up with a set of rules that need to be followed if you want to be a witness.
He wasn’t holding back on swear words but he also offered a bribe to those who want to follow his rules and his vision. The ending of his statement was more than clear.
Do you like Justin Sun or do you just want to make love to him?
The post was then edited by JS or someone on his team.
https://steemit.com/steem/@justinsunsteemit/justinsunsteemit-witness-voting-policy
After this, the second round of negotiations took place and you can hear the recording of it here. A breakdown of some key talking points can be found here — https://twitter.com/brianoflondon/status/1235885094679785472
Why should you care and where do we go from here?
There has been a lot of media coverage of this incident but none of them seem to be mentioning the locked tokens that came from Binance, Houbi, and Poloniex (also owned by Justin Sun). If a hard fork doesn’t take place and the community stays by that decision, all of these exchanges will have to wait 13 weeks to get their funds back. Every week they would be getting 1/13 of their user funds so a potential liquidity disaster could be excluded.
This whole incident isn’t revolving around Steemit and TRON but the whole blockchain space. DPoS governance is at stake and if TRON decides to go forward with another takeover for the sake of hard forking and enabling shorter power-down times for exchanges, we can only expect more of these incidents to take place.
It has become clear that individuals with enough funds can take over any DPoS blockchain at will with no consequences whatsoever. Exchanges have enough user funds to execute such takeovers without the users even knowing what their tokens are used for.
As of today, there is no evidence that a TRON community exists nor did they take part in the active discussions on Twitter and Discord. The only people representing TRON were the developers, JS, and his PR team. In my recent article on HackerNoon, I have researched user engagement for some of the biggest accounts on Twitter. JS and his 2 million follower-base seem to have the lowest score in that research.
Despite the efforts of his team to represent him as a figure that has a lot of influence in the cryptocurrency space, Justin Sun has failed to live up to that name. Going through his Twitter feed you will find a lot of outrage about the Steemit takeover and a few bot accounts that cheer whatever he tweets.
It is more than clear that he has teamed up with Binance on this venture and they aren’t backing down. The funds that came from Binance are still on lockdown and that only indicates that they will probably force a hard fork if the community doesn’t agree with their requests.
A word from the author:
3 years ago I have left the corporate space after working in PR and marketing. The reasons for that were the constant deceptions and marketing strategies that held no moral values. I was hoping that will change with decentralization but I was wrong.
During my involvement in ICO marketing and various other consulting sessions with project owners, I have concluded that only 3 projects in the space have a community behind them.
Bitcoin
Ethereum
Steemit
Everyone else was either bringing bot accounts in through earn.com or paying freelancers to post comments from various accounts on various platforms. The current situation with Steemit has given me hope that decentralization will indeed prevail so I have decided to dedicate my free time towards a good cause (so I believe).
If Justin Sun and friends end up winning the argument by imposing a hard fork, the Steemit community will probably be disbanded and the whole project will suffer big consequences. Years of hard work from the Steem developers and the thriving community will go down the drain and into centralized pockets. This is something that will shake up the whole cryptocurrency space while giving more power to centralized entities such as TRON and Binance.
I will keep supporting the Steem community as long as they stay true to their ideals and vision. I urge you to do the same if you understand how much we would lose if one of the few communities that actually exists gets destroyed by dictatorship and the absence of common sense.
In case someone interprets this piece as opinion-based, it is to be understood that those opinions are mine and they do not reflect the opinions of the Steem community in any way. as I am not an active member of that community.
Hard facts before we go:
CZ is not pro-decentralization as that goes against his business strategy, and SAFU is not a word.
