TRON founder Justin Sun has, according to blockchain data, seemingly executed a hostile takeover of the Steem blockchain with the help of major cryptocurrency exchanges.
The move was made shortly after TRON 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 a reversible upgrade that would temporarily limit the power of Steemit Inc’s STEEM holdings to give its community time to digest the acquisition and gain clarity on it. Steemit Inc is the company behind Steemit, and as such has a large percentage of funds gained through a pre-mine. The funds have historically never been used for governance decisions, and were instead meant to help the platform grow.
In response to the soft fork, TRON has issued a statement saying it would use Steemit Inc’s holdings not only to vote, but to thwart the soft fork itself, adding the update was “maliciously structured” and could even be deemed “illegal and criminal.” The statement reads:
Unfortunately, the Witnesses’ decision created a need to reclaim the stake and vote in new witnesses to usher in new policies for a healthier ecosystem and community.
To execute the hard fork, TRON had the help of major cryptocurrency exchanges Binance, Huobi, and the TRON-owned Poloniex. These exchanges, along with Bittrex and HitBTC, control most of STEEM’s trading volume according to CryptoCompare data, and as such allowed for control of the network.
Using said control TRON ousted 20 of the 21 witnesses on the Steem blockchain and replaced them with accounts created three days ago by one believed to be controlled by TRON. In response to reports suggesting the move was a hostile takeover, Justin Sun claimed on social media hackers had taken over the Steem blockchain after freezing 65 million STEEM tokens “legally owned by Steemit.”
(1/9) On Feb 22, some malicious hackers froze 65 million #STEEM legally owned by Steemit, the core STEEM developers. When we found out, the hackers already hijacked STEEM & threatened to nullify the existing STEEM. We had a difficult choice.
— Justin Sun (@justinsuntron) March 3, 2020
Sun added that TRON will give voting rights back to the community “once we’re sure malicious hackers can’t sabotage STEEM anymore.” He addresses reports suggesting it was a hostile takeover claiming its intentions were to “protect the sanctity of private property.”
Binance CEO Changpeng Zhao also reacted to the move on social media, revealing Binance will remove its vote based on the community’s feedback. Both Steemit and Steemd, a blockchain explorer, have been experiencing outages after the move.
Featured image via Pixabay.