Cryptocurrency exchange Binance said that it was forced to support the may 20 hard fork of the Steem blockchain, aimed at freezing the assets of former platform validators for $5.7 million.
The Protocol update blacklisted 64 accounts of supporters of the previous network hard fork, which resulted in an alternative hive blockchain. Together, they own 23.6 million STEEM tokens.
The organizers of the hard fork Hive, who disagree with the attempt of the Head of the TRON Foundation, Justin Sun, to seize power after buying 20% of all STEEM in circulation, included his supporters in the list of exceptions. They did not receive any new HIVE tokens.
In a statement, the exchange team noted that it initially decided not to conduct an update aimed at blocking assets after receiving a request on may 15, 2020:
"We do not approve of this type of behavior and believe that blockchains should not be used as a tool to censor or edit user balances."
But, after the hard fork that took place on may 20, binance users who own STEEM lost the opportunity to move their tokens to the blockchain. Deposits and withdrawal of tokens from the exchange were suspended. The team said it was forced to reconsider the decision to update.
"It's a difficult situation because there are other innocent users who own STEEM. So we actually have to support the update, " said Binance CEO Changpeng Zhao.
As a response to the situation, the exchange plans to reduce the number of trading pairs with STEEM to one from the current three over the next two months.
It was not possible to block the funds of hive organizers as a result of the hard fork — an unknown party brought the assets of former validators subject to freezing to the Bittrex exchange. Justin sun went to the police.
Initially, Binance, Huobi, and Poloniex supported San's attempt to gain control of Steem. Later the first two exchanges refused to intervene
"The drama with STEEM is probably the most important thing happening right now in the crypto space. This is an amazing experiment in mergers and acquisitions, in competitive strategy, and in the legal/social consequences of" theft "with the help of a hard fork, which causes tough discussions on many major exchanges," said BlockTower Capital IT Director Ari Paul.
In his view, the big players, such as centralized exchanges are in the near future will remain in the role of arbitrators in a decentralized cryptocurrency space.
UPDATE: BInance CEO Changpeng Zhao released a statement explaining why he was guided in making the decision to support the hard fork directed against the opponents of Sana. He reminded that it reset the balance for several reasons
"We are categorically against zeroing other people's assets in the blockchain. This is contrary to its very spirit and decentralization. The fact that this can happen on the network means that it is overly centralized, " Zhao said.
He called the decision to accept updates difficult, but necessary to protect the interests of users.
According to him, although the branching of the blockchain in this case was not discussed, technically the update was a hard fork.
Zhao believes that in a decentralized world, forks are a way to resolve dissent in the community. He actually advised to resolve the situation in Steem in This way.
The CEO of BInance stated that they will support any forks if there is a sufficient community behind them. For the exchange, this carries additional costs without sufficient returns, but "we decided to do additional work precisely because we value the responsibility we bear to our users," Zhao added.
Recall, according to Sana, the purchase of 20% of all issued STEEM tokens by the Tron Foundation should be perceived as a" partnership", not a takeover. This is the character he tried to give to the relationship from the very beginning, he added, expressing his view on the conflict.