Fork War Reenactment! Justin Sun Forcibly Acquires $5 Million Worth of STEEM Tokens, Binance Announces Support for Controversial Fork

Binance cryptocurrency exchange announced on May 23 that it supports the 0.23 version network upgrade, code-named "New Steem," which has been criticized by the crypto community. They have also blacklisted an account that previously sent 23.6 million STEEM tokens (approximately $5 million) to Bittrex.

The Beginning of the Steem Acquisition Case

Tron founder Justin Sun announced the completion of the acquisition of Steemit on February 14, which triggered a series of controversies, including community soft forks, asset freezes, allegations of vote buying to control nodes, community conflicts, and even skepticism from Ethereum founder Vitalik Buterin regarding the DPoS mechanism.

The Steem community first initiated a soft fork version 0.22.2, freezing all pre-mined tokens to limit Justin Sun's control over the network. However, Justin Sun later collaborated with major exchanges to intervene in witness voting and attempted to take over blockchain permissions. Binance "originally" intended to participate in the voting, but CEO Changpeng Zhao later stated:

We did not complete the vote. Due to miscommunication, our earlier involvement was an oversight on my part. We will remain neutral and continue to support normal hard forks/upgrades in the future.

Despite this, Justin Sun still retained control of the Steem network, claiming to have fully restored blockchain order on Steem, but the situation is far from over.

Community Takes Charge: Birth of the Forked Coin HIVE

Original Steem community members did not sit idly by. On March 20, they conducted a hard fork using the existing Steem code, creating a DPoS governance blockchain project named HIVE. HIVE, born out of the community, saw a dramatic surge of over 400% after being listed on the Huobi exchange. Despite subsequent price corrections, it ranked 71 in market capitalization at the time of writing, surpassing Steem at 76.

Additionally, during the hard fork for HIVE, a detailed "HIVE Exclusion List" was released, excluding Steem supporters. In retaliation, Justin Sun announced the implementation of a code-named "New Steem" 0.23 hard fork to "confiscate" the 2.36 million STEEM tokens (approximately $5 million) originally held by HIVE supporters.

After the "New Steem" Hard Fork

There was a twist in the story. Following the implementation of the "New Steem" hard fork, the tokens were transferred as planned to a Steem account named Community321. However, shortly after, it appeared that a white-hat hacker intervened, transferring all tokens to the Bittrex exchange with a message:

These are the funds stolen from Steem witnesses during the 0.23 hard fork on May 20. Please return them to their rightful owners before the fork.

According to an official announcement from Bittrex here, Bittrex co-founder Richie Lai confirmed that the funds were transferred from the Community321 account, expressing confusion and stating:

There is some complexity in the overall information. The blockchain consensus agreed to move the funds to the "community321" account, but I believe what happened during the hard fork and the hacker attack are two separate events and should not be conflated. Until users can prove ownership, these STEEM tokens will remain unclaimed on Bittrex.

Binance Support for the Fork Sparks Controversy

In an announcement, Binance stated that they initially received an upgrade notice on May 15, decided to listen to community feedback, and later considered that failure to comply with the fork would prevent users from trading STEEM tokens. Therefore, they synchronized with version 0.23 of Steem. Binance CEO Changpeng Zhao (CZ) also wrote a lengthy response here:

We did not want to support this upgrade. However, if we did not, users would not be able to withdraw STEEM tokens. The wallet would stop syncing at a certain block height. Soon after, other exchanges upgraded and enabled withdrawals, and many users requested Binance to follow suit.

Based on the primary principle of "protecting users," we did not want to freeze people's funds. Whether we were willing to support this hard fork or not, users should be allowed to freely deposit and withdraw. The majority of the community supports our decision.

Many users also believe that STEEM tokens should be frozen indefinitely or delisted immediately, but this would harm STEEM holders and innocent users. I believe these opinions come from users who do not hold STEEM.

In conclusion, CZ expressed the hope that the above would illustrate the complexities faced by exchanges when making decisions, acknowledging the misunderstandings and criticisms they may receive. He emphasized the need to collectively address the problems that arise from decentralization to build a healthier decentralized ecosystem.

At this stage, both Steem and HIVE sides claim ownership of the 2.36 million STEEM tokens and have threatened legal action. Justin Sun has tweeted that he is cooperating with law enforcement to accuse HIVE witnesses of stealing the $5 million and is taking action to reclaim the assets.