The Steem blockchain went live back in 2016. Steemit Inc., the blockchain alternative to Reddit, was launched in July of the same year and was an instant among the crypto community. Currently, there are more than 1.3 million registered accounts on Steem, according to data provided by a blockchain explorer.
Earlier this February, Steemit was acquired by Justin Sun, CEO of the Tron foundation, according to a tweet from Ned Scott, one of the founders of Steem. As per the tweet Scott had sold Steemit to Sun, but the tweet was later deleted and the move was referred to as a “strategic partnership” in the official releases.
The market reacted positively to this event, and the STEEM token, the Blockchain’s native token, surged more than 25% over a 24-hour period while TRX went up 10%.
While acquiring the company, Sun took ownership of approximately 65 million STEEM tokens in concern that the tokens could be used to dominate decision-making regarding the future of the Steem blockchain and community. Not everyone was happy with the move, and the original Steemit community came together to implement a soft fork to prevent Tron from being the central authority.
To address the situation, Tron allegedly devised a plan which is being described as a “hostile takeover” with the help of some major exchanges to mobilize customer deposits to stake large amounts of STEEM tokens to vote in support of removing the previous witnesses. All the top-20 witnesses were replaced with accounts powered by Steemit, Binance, Huobi, and Poloniex, surprisingly, all of which were created in February 2020.
Binance Apologises following Huobi
The exchanges involved have since then seen massive backlash from the crypto community. Now, Cryptocurrency exchange Binance has officially apologized to the community following its involvement in this scandal, with a letter posted on March 10.
As per the letter, the exchange states that it holds a “neutral” position and has “no interest” in on-chain governance. “We hold a supportive position of normal upgrade/hard fork and will continue to do so in the future,” the letter added.
Furthermore, the platform also provided records of it powering down all of the 31,730,000 STEEM tokens on March 8 and 9, which was staked in support of Justin Tron’s allegedly “hostile takeover” of the blockchain. The exchange added:
“Hopefully, the Steemit 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 CEO Changpeng Zhao had previously denied allegations about Binance being compensated for assisting Steemit with the shift of power.
Prior to this, Huobi withdrew its vote and also informed the community that Sun told Huobi that the Steem network “was at immediate risk of an attack” which could directly impact the exchange’s clients’ assets. Based on this information, Huobi had determined that “helping Steemit and Tron was in the best interest” of its users.
Justin Sun with a comeback
So far, Tron CEO Justin Sun has addressed the community as a group of “malicious hackers” and then went on to enlist Binance, Huobi, and Tron-owned Poloniex to vote the STEEM tokens deposited by their own users to initiate a hard fork that would reverse the community’s action.