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Blockchain News

Binance uses depositors’ funds to take over Steem

Binance has been the subject of controversy recently with the Maltese regulators and now a new story has surfaced. In a recent turn of events, Tron and Steem decided to connect their blockchains through cross-chain atomic swaps. With the acquisition, Justin Sun gained control of the “ninja mine” which is said to account for 20% Steem’s supply.

As a delegated proof-of-stake (DPos) blockchain, this makes Justin Sun a considerable decision-maker on the network. While the community was confident that co-founder Ned Scott used the ninja mine to benefit the network, they are not so sure with Justin Sun.

As a result, witnesses, developers and stakeholders agreed to protect the network’s integrity with a temporary protective protocol that would remove Sun’s voting power for a limited time to ensure decentralisation. The latter update would be reversible in the future.

Luke Stokes, a witness on the Steem blockchain released a video explaining that voting had been taken over by “DEV365” that was supported by Huobi, Binance and Poloniex. Ethereum’s founder, Vitalik Buterin, tweeted: “Seems like the first big instance of a “de facto bribe attack” on coin voting (the bribe being exchs giving hodlers convenience and taking their votes)”.

After the controversy spread, Binance’s CEO announced that they had reversed their votes and described it as an “oversight” on his part. He also explained that they support upgrades/forks as well as the fact that they do not have interest in chain governance.

The incident caused the head of communications, a blockchain developer and a blockchain engineer at Steemit to tender their resignations as they did not want to be part of this network anymore.

Regardless of how this particular event turned out in the end, it shows a significant weakness of “decentralisation” with the presence of centralised exchanges. This also signalled a major flaw in DPoS networks (Steem, EOS, Tron) where a small group of people with enough influence can take over an entire network.

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