An Explanation of the Emergency Actions Taken on 17 June 2018

in eos •  2 months ago

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Update: 19 June 2018

ECAF has issued a valid order requesting the freeze to continue. EOS New York will abide by all valid arbitration orders, without delay. We will continue to blacklist the addresses in question. The order can be found here


In April 2018, EOS New York pledged to the community in our code of conduct that:

“We maintain that individual life, liberty, and property should be held in higher regard than code and systems, and ought to be protected against technological attacks and financial greed.”

We also wrote: ”We will abide by, follow, and enforce all arbitration decisions that are enacted, without delay. We also will abstain from publishing opinions on active arbitration.”

We publish this opinion because we do not believe there is active arbitration occurring by the EOS Core Arbitration Forum (ECAF).

We have also released our thoughts on the interim Constitution which can be found here.

Background

On 17 June 2018, the top 21 Block Producers unanimously agreed to protect property that may have been compromised through phishing attacks or other scams where member’s private keys were compromised. By now, you are likely aware of EOS911, the noble initiative designed to help community members with compromised private keys. This initiative was the catalyst for this post.

The Goal and Structure of EOS Governance

EOS is the first governed blockchain, and the governance structure is established by the Constitution. There are three distinct groups which keep one another in check: Block Producers, Arbiters, and Token-Holders. These groups roughly translate to the Executive, Judicial, and the Constituency, respectively. The Constitution exists as an interim document according to Article XX until such time that we have the ability to obtain token-holder opinion in a formalized way on-chain. We have made our opinion very known that, until such a mechanism exists, there is no higher priority for any BP or BPC.

The Roles of Each Branch

Token-Holders: These are the members of the network. It is consensus among token-holders that drives change on the network.

Block Producers: They validate transactions in a first-in-first-out order and secure the network. They are elected by the Token-Holders.

Arbitration: The formal bodies that provide dispute-resolution services. Their rulings are binding on-chain.

The Order of Events

The EOS911 initiative was created by EOS42 as a way to prevent victims of private key theft from having their tokens lost once the 72 hour unstaking period ended following the EOS Mainnet Launch. Once that period ended, the thieves would be free to transfer the tokens wherever they’d like, rendering futile any recourse available to the community at this time.

Forseeing the process that would be required to act, EOS New York, on a call with BPs and BPCs, requested an expedited review of the merits of the case from ECAF (EOS Core Arbitration Forum) who was also on the call. The idea was that if ECAF found merit in the evidence provided, a formal ruling from ECAF would ask the BPs to “freeze” the accounts in question until such time that a thorough and formal review of the claims could be completed.

We initially received a preliminary notice from ECAF that they were likely to issue an emergency order to freeze certain accounts affected by the scams.

But this didn’t happen. Despite ECAF’s initial notice that they would opine on the matter, they instead responded to our request with the stance that they did not have the authority to act during this gray period wherein only an interim Constitution existed. When we learned the ECAF would not change its position, it was clear that the judiciary was not available to the community and these affected community members at this time. We now found ourselves thrust into a position of acting as both executive and judiciary, which we initially resisted. We plead with the accompanying Block Producers/Candidates that the ECAF must step forward to issue the emergency freeze action on the affected accounts. Without this, we proceeded as group to review the evidence ourselves, and came to a difficult decision of executing based upon the evidence brought forth.

But this is not what Block Producers are meant to do.

The evidence appeared reasonable and was presented by EOS42 and EOSRio, the two groups leading the EOS911 initiative. We saw specific comments from the victims and the account addresses. The evidence indicated that the legitimate owners had proven their ownership and signalled their will for account suspension (i.e. freeze via actor-blacklist) through https://recovery.eos911.io.

The method of obtaining this evidence was developed by EOS42. It was a smart contract on Ethereum which victims could send signed transactions from the ETH addresses they owned that had identical ERC-20 EOS token balances to the EOS mainnet accounts in question.

These Ethereum addresses were matched with the victims’ EOS addresses which they voluntarily submitted.

Since the unstaking process for many of these accounts had already begun, we had only hours to act or else property could be permanently removed from the EOS network. After the top 21 Block Producers reviewed the evidence, we all felt it compelling and chose to vote to temporarily “freeze” those accounts. To be clear, we were only making the assertion that the evidence was compelling enough to be reviewed in the future by ECAF. No tokens were moved and property remained in place in accordance with the snapshot.

Our Stance

EOS New York chose to enact this freeze because we believed that we were following the spirit of the governance system we as a community seek to create, despite it being formally absent. EOS is a platform meant to enable solutions which protect life, liberty, and property and that’s what we believed we were doing through this emergency action.

EOS New York also believes that the interests of the network exceed those of any group or individual. Maintaining a predictable environment that follows process and governance, not the romantic idea of justice, is our goal. As of right now, we do not have a timeline for when the freeze action can be lifted or sanctioned by ECAF. Freezing accounts outside of formal processes with no timeline or next steps is not ok. We have asked for ECAF to submit a formal ruling on the merits of the case by 1300 UTC 19 June 2018. If no such ruling is released by this time, EOS New York will remove the “freeze”, which cannot be enforced without unanimous consensus by all top 21 Block Producers. The request was written as follows:

EOS New York is requesting a formal response by 1300 UTC 19 June 2018 hours to the following question:

Exactly when and through what set of circumstances will ECAF be able to exercise authority on matters of on-chain disputes?

We are also asking for a formal statement regarding the validity of the freeze of 7 EOS accounts undertaken yesterday 17 June 2018 for delivery by 1300 UTC 19 June 2018 as well.

If we do not receive a response by the deadline, EOS New York will not be able to support any current or future extra-judicial action.

In accordance with what we believe the proper governance protocols to be and the Block Producer Agreement, we have filed a claim against ourselves at https://eoscorearbitration.io/ and all top 21 BPs. For reference, the ticket created is #ECAF00000100.

A Call To Action

This is a call to action to all community members. We are encountering these problems on a daily basis and we do not have the tools in place to properly address them. As a community, it should be our top priority to develop the mechanisms that are capable of polling the token-holder community and obtaining the on-chain consensus required to move issues, like the Constitution, forward. Until such a mechanism is available EOS New York will not take part in any emergency action if the network itself is not at risk.

BP Agreement: Here

Interim Constitution: Here


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EOS New York is a Top 21 Block Producer on the EOS Mainnet Blockchain

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Well done. As much as the FUDster may scream centralization this is exactly what most people want in a blockchain - human oversight and the ability to fight back against scammers. It is early days so the BPs have overstepped as an interim measure. Everyone is learning rapidly and I think this is a great indication that EOS is quickly becoming a tech for mass adoption.

One thing i dont like about EOS is that 100 people are holding 70% of all Eos coins.
It makes it centralized .

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This does concern me too. I thought that was the empowerment of EOS - no one body could control EOS? May I request a source or link to this info, if you have? Thanks.

I hope ECAF can do the right thing here and enforce this ASAP.

Great work, to all the FUDlers the truth will set you free.

Very well said. I particularly like this stance:

We have asked for ECAF to submit a formal ruling on the merits of the case by 1300 UTC 19 June 2018. If no such ruling is released by this time, EOS New York will remove the “freeze”, which cannot be enforced without unanimous consensus by all top 21 Block Producers.

I just published some thoughts I've been drafting for a handful of days here that I'd love your input on: Let's Make the EOS Constitution an Actual Contract

Much of what we're seeing now, I think, relates to dealing symptoms instead of the root cause. The root cause is the constitution hasn't been agreed to by anyone. Let's fix that and give ourselves something to stand on to move forward.

Yesterday the block producers believed it is possible to help the account owners notwithstanding the lack of arbitration. Today some BP’s only wants to continue with the fix following an arbitration order. We refer to our earlier post regarding this issue.

We at EOS Amsterdam believe the top 21 block producers can help the victims. This can be based on “negotiorum gestio”.

Negotiorum gestio means that you are allowed to pull out someone else’s fire and get your costs, if any, rewarded and further that you are not liable for meddling in the other person’s affairs. I believe (at first sight) we could base a BP action on that principle. It is an ancient Roman principle that survived the millenia.

In this concrete case negotiorum gestio would be an elegant way out of the problems the alleged lack of agreement and lack of arbitration causes.

Further, a sidestep, not doing anything and let the phishing site cash in on their scam in full sight while totally being able to prevent that easily, might lead to liability also. In my jurisdiction that is.

Well done !!!!!!!!!!

Do not lift the freeze until the original owners can regenerate the keys! Frozen accounts do no harm!

EDIT: Again, do not lift the freeze. Let a majority of BPs decide. Also make sure to publish the names of BPs and of Arbitrators that are in favor of these thefts either explicitly or by omission.

EDIT 2: This is the Ethereum DAO of EOS, earlier than expected. The critics were always going to criticize no matter what, and if Ethereum did not act to stop the DAO, it would have destroyed Ethereum -- a 200 million dollar theft that was allowed when it could have been stopped. This is unprecedented in blockchain: a theft that can be easily stopped not being stopped. Don't let a stupid Republic roleplay stop the BPs from doing the obvious right thing.

EDIT 3: "EOS Registration" was a design defect. You're correcting a design flaw in the software. The Ethereum private key should have been used natively by the EOS software to sign the first transaction of every account.

I believe EOS NY as a Block Producer of EOS acted in a manner consistent with many Good Samaritan Laws. Given the fact that there was no functional body to take another action to safeguard the EOS holders, EOS New York did their best to minimize damage in an imperfect situation.

"Good Samaritan laws offer legal protection to people who give reasonable assistance to those who are, or who they believe to be, injured, ill, in peril, or otherwise incapacitated.[1] The protection is intended to reduce bystanders' hesitation to assist, for fear of being sued or prosecuted for unintentional injury or wrongful death."

https://en.wikipedia.org/wiki/Good_Samaritan_law

However, having done this, EOS New York must stand by their actions rather than rolling them back, until such time as arbitration can occur, and ECAF can do its job. The decision to roll back the freeze as of 1300 UTC 19 June 2018 if ECAF does not issue a ruling by that time, is arbitrary and liable to further compound the difficulties of this situation.

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Good Samaritan law
Good Samaritan laws offer legal protection to people who give reasonable assistance to those who are, or who they believe to be, injured, ill, in peril, or otherwise incapacitated. The protection is intended to reduce bystanders' hesitation to assist, for fear of being sued or prosecuted for unintentional injury or wrongful death. An example of such a law in common-law areas of Canada: a good Samaritan doctrine is a legal principle that prevents a rescuer who has voluntarily helped a victim in distress from being successfully sued for wrongdoing. Its purpose is to keep people from being reluctant to help a stranger in need for fear of legal repercussions should they make some mistake in treatment.

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Sometimes it is such that even in a totally decentralized or environment of total anarchy, that some bad-acting agents need to be governed accordingly. Hold to the "constitution" fellas!

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A valid arbitration opinion was released. The freeze stands.

This definitely seems like the right move, acting on an interim basis in the interest of the community. Great job!

This was definitely the right thing to do given the difficult circumstances.

FYI... The image link in the June 19 update doesn't work. When I click on it, it says that the image contains errors...
[Edit] I found this link to a post about the order: https://steemit.com/eos/@genereos/first-eos-arbitration-order

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Fixed! Thank you.

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Great piece guys.
Still find it weird that BTC/ETH people are upset that users didn't get robbed. Kinda weird.

nice spin of pure BS from EOS

I see you give a lot of support for many people, for me you are a great person because likes support many people. I really need support for every post i karna until now no one support me I always try hard for that, so i get support from you, thanks