Binance CEO Says Steem Too Centralized but Exchange Must Support Controversial Hard Fork

Binance is forced to "technically" support last week's hard fork of the Steem blockchain, according to the exchange's CEO, Changpeng Zhao.

AccessTimeIconMay 25, 2020 at 9:34 a.m. UTC
Updated Apr 10, 2024 at 2:14 a.m. UTC
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Binance is forced to "technically" support last week's hard fork of the Steem blockchain, according to the crypto exchange's CEO, Changpeng "CZ" Zhao.

In a statement on the company's official blog Sunday, CZ said that while the exchange is "very much against zeroing other people’s assets on the blockchain," to not support it would mean Binance users would not be able to withdraw their steem tokens.

The result of a dispute in the Steem community over the acquisition of SteemIt – the blockchain ecosystem's biggest and most powerful application – by Tron and Justin Sun, the hard fork was used as a tool to strip 64 dissenters of their token holdings. At the time around $6.3 million worth of cryptocurrency was grabbed, with one of the affected parties, Dan Hensley, saying he alone had lost around $1 million of the total.

Wiping out people's token holdings "goes against the very ethos of blockchain and decentralization," said CZ. The fact this can happen on a blockchain means it is overly centralized."

The fork put Binance in a "tricky" situation, he continued. While the exchange would not otherwise support the fork, "if we don’t support it (technically), no users can withdraw any STEEM coins."

CZ explained Binance had waited to see how other exchanges reacted to the fork, saying that soon some had enabled the upgrade. He added users had been demanding support for the fork, too.

Reading between the lines, CZ appears to be encouraging users to withdraw their steem tokens, mentioning several times in the post that supporting the fork would allow withdrawals – of course, it could allow continued holding or trading too.

"We do not want to block people’s funds. In this case, we should allow users to withdraw their funds, whether we willingly support this hard fork or not," reads one of his lines.

The issue of the hard fork – launched apparently with the sole purpose of confiscating the holdings of key community members who were unhappy with Justin Sun's power in the ecosystem and how he was wielding it – followed a previous hard fork that saw some Steem users create a new blockchain called Hive. The new chain copied over all the tokens from Steem, but not those of Sun and some Steem witnesses.

While the tit-for-tat fork may seem to some a fair reprisal, it's worth noting that Hive's tokens were effectively a free copy, while original holdings on Steem were obtained through genuine investments.

In the post, CZ notes crypto advocate and author Andreas Antonopoulos had suggested in a tweet that Steem's latest fork would likely result in litigation, with supporting exchanges also to be included as defendants.

The Binance CEO said: "I would have thought that [a class-action lawsuit] would go against everything he is preaching. In a decentralized world, anyone should be able to support any fork. Exchanges providing choices for users to get a 'forked coin' is no different by definition."

The Steem saga illustrates that decentralization is not a utopia and that the community must work together "build a healthier decentralized ecosystem," he concluded.


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