Huobi, Binance Steemed at Sun

You’ll be shocked—shocked!—to learn that the two cryptocurrency exchanges Tron CEO and Steemit Inc. owner Justin Sun suckered into helping him execute a hostile takeover of the Steem blockchain are supporting efforts to boot him out of the community.

Actually, it’s more like Binance and Huobi are helping the Steem community abandon Sun. 

On March 17, leading Steem developers and community members announced Hive, a hard fork of the social blogging platform’s blockchain designed with one goal: to recreate Steem without the 65 million STEEM tokens (and their 20% governance vote) Sun received when he acquired blockchain developer Steemit.

Hive plans to distribute its new HIVE tokens to STEEM holders on a one-to-one basis on Friday, March 20—Sun’s cache excluded.

STEEM was up about 45% on March 19.

Hastening Sunset

Late on March 18, Binance announced on its blog that it “will support the upcoming Steem hard fork initiated by the Hive.io team and will distribute the new HIVE token to users holding STEEM.”

This despite the warning that Binance does not guarantee it will actually list the new HIVE token. That will have to “go through the same strict listing review process as… any other coin/token,” according to the blog. 

Huobi’s (Chinese language) post said much the same thing, including the warning that a HIVE listing was not guaranteed.

The Binance blog also linked to the Hive Blockchain announcement. That said that the only Steem accounts that “will not be included in the initial airdrop are those containing the Steemit Inc ninja-mined stake.” 

Nor, Hive added somewhat cryptically, would “those who actively contributed to (and publicly declared support for) the centralization of the Steem Blockchain,” receive matching HIVE tokens. So the two exchanges’ actions might be seen as protecting customers from a vague threat.

Sun vs. Steem

The feud began when the 20 elected witnesses who validate Steem blockchain transactions temporarily froze Sun’s STEEM stake, citing concerns that it would give him too much control of the delegated proof of stake (DPOS) blockchain. Sun promptly called the action “criminal” and labeled the witnesses “malicious hackers.” 

On March 2, Sun reportedly reached out to Binance and Huobi, asking for their support in blocking an ongoing hack. The exchanges took it as an emergency aid request and used their Steem holders’ tokens to vote out the existing witnesses and reverse the freeze. Those votes, along with others provided by Tron-owned Poloniex, gave Sun control. 

After an outroar from the Steem community, Binance and Huobi announced the next day that they would remove their votes. Binance CEO Changpeng “CZ” Zhao issued a mea cupla on Twitter, citing his own poor oversight and a “[m]communication/upgrade rubber stamp.” 

Binance, he promised, “had no interest in chain governance.” He added “We stay neutral.”

The response from Huobi was a bit more formal. And blunt.

Huobi explained on its blog at the time that it had been “informed that the Steem network was at immediate risk of an attack, an issue that directly impacts our users’ assets.”

Working under this assumption, Huobi voted its users’ STEEM in support of Tron and Steemit, the message explained.

“Based on the information provided to us and out of an abundance of caution, we decided that helping Steemit and Tron was in the best interest of our users—and the network at large,” Huobi said.