Leading cryptocurrency exchange Binance has published a letter to the Steem community, apologizing for playing a part in what has been deemed a “hostile takeover” of the cryptocurrency’s blockchain.
In the letter, Binance writes that it has removed the votes that helped Justin Sun take over the Steem blockchain. It reads:
We sincerely apologize for the recent situation involving STEEM, which stemmed from miscommunication about the specifics of the blockchain’s upgrade/hard fork.
The exchange added it “stays neutral and has no interest in on-chain governance beyond the Binance ecosystem,” noting its stance is to support upgrades to blockchains whose cryptocurrencies are listed on its platform.
After noting that it hopes STEEM and TRON will be able to reach a consensus in an efficient manner, the exchange wrote:
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.
The cryptocurrency exchange further added that it participates in community voting in the interests of its users, and provides staking services to proof-of-stake blockchains it supports. As such, it will distribute to users who held STEEM on binance at the time of the vote the rewards reaped from the action.
These are going to be released on the STEEM blockchain over a period of 13 weeks and should total 24,692 STEEM, equivalent to around $5,080.
Why Binance is Apologizing
As CryptoGlobe reported, Justin Sun acquired Steemit Inc, the company behind the Steem blockchain’s number one application, Steemit. In response to the acquisition Steem’s witnesses – similar to miners on the Bitcoin blockchain or block producers on EOS – moved to limit Justin Sun’s power on the network through a soft fork.
The soft fork was meant to limit the power of Steemit Inc’s STEEM holdings until the community had clarity on the acquisition, as it could use the alleged 65 million STEEM holdings to influence governance.
In response, however, TRON issued a statement saying it would use the holdings to vote on governance decisions, and said the update was “maliciously structured” and could be deemed “illegal and criminal.” With the help of Binance, Huobi, and the TRON-owned Poloniex exchange, it ousted Steem’s witnesses and replaced them with accounts seemingly controlled by TRON.
Justin Sun defended the move on social media, saying the STEEM blockchain was attacked by hackers, who froze the 65 million STEEM tokens Steemit owned. The community rallied, and shortly after Binance CEO Changpeng Zhao reacted on social media saying Binance would remove its vote based on the community’s feedback.