The ethics of Binance CEO Changpeng Zhao have come into question again, along with his relationship with Tron CEO Justin Sun, after what amounts to a hostile takeover of the Steem blockchain using user funds from several exchanges. The crypto community has been up in arms following the replacement of the entire network of decentralized Steem blockchain validators with exchange operators in what seems to be a power grab by Sun after he was initially denied.
Sun’s Steemit Saga
The saga began on Valentine’s Day when Sun announced that he had taken over the Steem organization and the founders’ hueg stash of STEEM funds. The STEEM community performed a soft fork on February 23 to ensure that those same funds could not be used by Sun to vote out the existing blockchain validators, known as Witnesses, and replace them with his own network.
To counter this, it seems that Sun managed to convince a cabal of exchanges, including Binance, Huobi, and Poloniex to put some 84 million of their platforms’ STEEM tokens forward for the voting process, with the result that the existing validators were indeed booted out to be replaced by the cabal.
Even worse, user funds seem to have been used for the purpose, as many STEEM holders began complaining about the inability to withdraw their tokens, which would tie in with the fact that STEEM tokens used for voting are locked for a number of weeks afterwards.
Sun Invents Hack to Deflect Attention
The crypto community is in open revolt of what has been labelled Orwellian tactics by the ringleaders, a situation made worse when Sun tried to pretend that the takeover was done to tackle hackers:
— Justin Sun (@justinsuntron) March 3, 2020
Zhao meanwhile rowed back on the vote, following the negative feedback the move garnered:
Re: Steem, read my “tweets and comments” about our position and thoughts on the issue. We will likely remove the vote, based on your feedback. The op requires people in several different geographic locations to coordinate, may take a little time.
— CZ Binance ??? (@cz_binance) March 2, 2020
These apologies didn’t cut much ice with the community and nor should they – regardless of whether the activities were carried out with good intentions or bad, they still have ramifications. The fact is that either Sun, Zhao and others knew what they were doing when they carried out the hostile takeover, or they did it with good intentions but failed to see the problem in what they were doing, having to be advised by an outraged community after the fact.
This either suggests malevolence or alarming amounts of incompetence are at work. Whichever of these is true, it is worrying that two men in such powerful positions in crypto colluded to such an extent with little thought or regard for the community as a whole. Their actions, regardless of the intention behind them, speak of a disturbing megalomaniacal streak that nothing short of a mass user revolt on their platforms can check.
Zhao in Danger of Ruining His Reputation
While Sun has always been a figure of ridicule and mistrust within the community, Zhao and Binance have, until recently, been held in high esteem by many. Binance’s star was already waning, and with this latest episode, Zhao might have committed an unforgivable sin.