Huobi Withdraws Steem Votes, Admits to Mobilizing Customer Funds
Huobi has posted a statement admitting that it used customer funds to vote with Justin Sun in a bid to remove Steem’s blockchain validators.
Four former witnesses have been voted back onto the council of 20 nodes that underpin the Steem blockchain. Their reinstitution follows the withdrawal of votes from major exchanges Binance and Huobi in support of what has been described in an attempted takeover of the network.
In a statement issued by Huobi on March 3, the exchange admitted that it had mobilized its customers’ STEEM holdings to vote in favor of ousting the blockchain’s previous validators in favor of Tron founder and recent purchaser of Steemit Inc, Justin Sun:
“From time to time, Huobi stakes user holdings to help block malicious activities and attacks on blockchain networks. Prior to this particular event, Steemit and Tron had reached out to seek our support.”
Huobi claims to have been told by Sun that the Steem network “was at immediate risk of an attack” that would directly impact the exchange’s clients’ assets. Based on the information provided to Huobi, it determined that “helping Steemit and Tron was in the best interest of our user — and the network at large.”
The exchange adds that it introduced the policing of mobilizing customers’ crypto assets in response to the frequent hacks that it claims occurred when blockchain technology was in its nascent stages, stating:
“Our policy of staking voting rights (when deemed necessary to protect our users) was adopted to ensure the welfare of the broader crypto ecosystem.”
Binance withdraws votes
Binance CEO Changpeng Zhao also announced that Binance had removed its votes on March 3, claiming it had merely sought to support an upgrade that the exchange had been made aware of.
Justin sun posted several tweets seeking to justify his actions, claiming that Steemit “will commit to withdrawing the votes ASAP once we’re sure malicious hackers can’t sabotage #STEEM anymore.” He said:
“Our intention was never to take over the network & all parties' votes will be withdrawn. We wanted to protect the sanctity of private property & the interests of all from malicious hackers.”
Justin Sun attempts to oust Steem witnesses
Steemit’s uses a proof-of-stake protocol — where a small number of “witnesses” are elected by STEEM holders to validate transactions and secure its network. Votes are allocated according to the number of tokens that an individual holds.
On Monday, following over two weeks of escalating tensions between Sun and the Steem community, Huobi, Binance, and Poloniex mobilized their customers’ STEEM deposits to vote alongside Sun to remove the network’s previous witnesses.
On Feb. 14, Steemit announced it would migrate from its native blockchain to the Tron network, following the sale of Steemit Inc — a decentralized blogging platform hosted on the Steem blockchain, to Tron founder Justin Sun.
In acquiring the company, Sun took ownership of approximately 65 million STEEM tokens. Fearing that the tokens could be used to dominate decision-making regarding the future of the Steem blockchain and community, the network’s witnesses sought to initiate a temporarily freeze Sun’s tokens via a reversible soft fork.
On March 2, the new Steemit team announced that it would use the tokens for voting to “resume the order of the community.”