Two days after the dramatic STEEM Hard Fork 23, Binance revealed its motivation for supporting the controversial update. Now, some of the most outspoken individuals within the crypto community have threatened the platform with multi-million-dollar legal action
Lesser of Two Evils
Some hours ago, Binance issued a statement explaining the platform's policy in regard to hardforking the STEEM network. This hardfork included cutting the un-staking period from 13 weeks to 4 weeks and blacklisting 65 accounts holding 23.6M STEEM net (ca $5M) by removing them from the blockchain.
As per this announcement, Binance is against this ideology and type of behavior that implements censorship into blockchain systems. Upon receiving the request to support this fork on May 15, 2020, Binance decided not to implement this upgrade.
However, after further analysis, Binance's administration concluded that this denial would violate the rights of STEEM holders as their tokens would be subject to seizure. Thus, Binance after all decided to support this upgrade.
Moreover, Binance will reduce the STEEM trading pairs from three to one in two months.
It's obvious that this wasn't an easy decision to make for Changpeng Zhao (CZ). Some members within the community highlighted that exchanges can be also named as defendants should a class-action lawsuit be filled.
The HIVE community (old STEEM token holders that decided to revolt against Justin Sun) asked CZ to withdraw this decision, outlining its damage to the overall progress of decentralization:
Correction: it’s not zeroing, it’s stealing. You can still reverse this decision. There’s still time. Accepting code that contains criminal activity is not best for Binance long-term health. It’s not good for crypto.
Seasoned investor Ari Paul, Co-Founder and CIO of BlockTower Capital, compared this situation with painful arguments about the block of Bitcoin (BTC), which resulted in its most widespread forks:
On May 23, 2020, CZ released a detailed statement on his position regarding this hardfork. In a prudent and discreet manner, CZ mentioned all the challenges that Binance has faced along the way in its this decision, and concluded that:
If a blockchain gets overly centralized, we should fork away from it.