"Sun's Folly" will be taught in future blockchain business schools

in #steem3 years ago (edited)

View this post on Hive: "Sun's Folly" will be taught in future blockchain business schools

In mid-February 2020 Justin Sun acquired the shares in Steemit Inc and proceeded centralise the blockchain under his control, improperly using Steemit's founders stake (intended for development and decentralisation of the blockchain) and tricking exchanges into initially supporting his power grab.

After extensive efforts to resolve the dispute failed, the community revolted and formed a new, fully decentralised blockchain - Hive - without the pernicious influence of Justin Sun and his minions.
Because of Open Source licensing, Hive was legally able to duplicate all the code and content on Steem.
The vast majority of the community and decentralised applications and projects moved to Hive and Hive was listed on many cryptocurrency exchanges without having to pay the normal listing fees.

On 19 May 2020, a Steem hard fork (0.23) designed to steal the Steem from 65 accounts associated with creating Hive became public.
My position on this hard fork can be found here: https://peakd.com/hf23/@brianoflondon/letter-to-exchanges-do-not-run-steem-hard-fork-23-hf-0-23-0

This was the final straw for my involvement with Steem.

I will now post exclusively on Hive at https://peakd.com/@apshamilton/posts
All my old Steem content can also be found on Hive.

"Sun's Folly" or "how to make crypto enemies and piss off people" (an entire blockchain community that you just spent good money to "buy") will be taught as a compulsory topic in the blockchain business schools of the future.

The Steem community has made crypto history here:

  • first being subject to a previously theoretical crypto attack vector, the double "defacto bribe attack" as Vitalik Buterin calls it, that has broad implications for dPOS blockchains in general;
  • second having centralised exchanges breaching their fiduciary and ethical duties to their customers by powering up liquid Steem (thus locking it up for 90 days and preventing customer withdrawals) and then voting against those customer's interests for stooge witnesses with no legitimacy;
  • finally, by an epic 'get out to vote' fightback in witness voting that has put 2 legitimate witness back in their rightful place and will hopefully soon remove all the Chinese sock-puppet witnesses that Sun had used to conduct his coup d'etat.

The first lesson students will learn is that decentralised blockchains based on real active communities and open-source software cannot be taken over by a pure financial corporate type play.

The second related lesson is that "you cannot buy a crypto community"; you can only get a community to follow your goals by working with them, gaining trust and showing good faith. Simply buying the shares in the founding company of a blockchain is not enough if a real community has developed (which is the only reason you'd be interested in buying in the first place).

Decentralised (partly or wholly) blockchains are completely different animals from corporations and too many people in crypto talk the talk regarding decentralisation but actually don't understand what it really means.

Justin Sun, brought up in authoritarian China, and used to absolute control of the Tron blockchain, was simply unable to comprehend the level of resistance to him ousting the witnesses legitimately elected by the Steem community, particularly by the foul means he used.

The third lesson is "do proper due diligence". Sun thought he was acquiring a large Steem stake with the Steemit Inc acquisition that he could do what he liked with.

But this ninja mined stake was not only subject to 4 years of understandings and a status quo that it had never voted. It also was subject to explicit restrictions on voting power in the blockchain code itself! An earlier hard fork had introduced those restrictions and the witnesses could turn them on at any time without changing the code. This is called a "soft fork" but this is a misnomer. It is not a fork in the blockchain code at all. It is just activating part of the code that is already there.

Proper due diligence would have revealed that this wasn't ordinary Steem. It was like shares in a company whose voting rights could be frozen by simple board decision. The restriction was already in the code, just like a restriction in the Constitution of a company. It was easy to discover with proper due diligence, even if Ned had not been straight with Justin about it.

But Justin missed this and falsely accused the witnesses of stealing his stake when in fact they just activated pre-existing code specifically which was put in place for exactly this scenario.

Justin's has stated that he knew nothing about the pre-existing understandings regarding this ninja mined stake between the community and Steemit Inc. He then claims to not be bound by them. However this is legally wrong. He bought a company, Steemit Inc, which was bound by these pre-existing understandings and owned the ninja-mined stake.

He IS bound by them, just as he is bound by the code.

It has been a scary but very exciting time to be part of the Steem community and see it come together to fight tyranny.
While we may bicker incessantly in normal times, when subject to external attack we come together and fight for our online lives.

I am so proud tonight of the Steem community and a particular respect to the brave martyrs of Steemit Inc: @andrarchy @vandenberg, @gerbino & @roadscape. While we risked our investment to save our Steem, they took the principled decision to resign their employment in uncertain economic times to protest tyranny. Thank you.

Postscript: A potential win-win way forward

My standard byline below could provide a win-win way forward for Justin Sun and the Steem community.

Just as Steemit Inc came with pre-existing obligations to the community regarding the ninja-mined stake that Justin didn't know about, it also came with a ~$400M legal claim against Facebook and Google for banning Steem advertising, which he also didn't know about.

This legal claim is worth far more than the ninja mined stake and is more than enough compensation for what Justin feels he has lost.

Rather than spending his money trying to take over the Steem blockchain, Justin can sign Steemit Inc up for @jpbliberty's crypto class action and participate in the funding of it. It needs less money ($US 2-3M in total) than he has already spent on Steem and has a huge ROI for his Steemit Inc claim alone.

If Justin supports this, it is a huge win for the Steem community also because every Steemian has a claim in this class action based Steem being worth $6.14 when the Ad Ban was announced and being very directly affected by the ad ban. We have great evidence of this from Steem posts.

We are well advanced with a law firm, top barristers, initial funding and US$350M in claimants signed up.

Signup for the Crypto Class Action against Facebook & Google's Crypto Ad Ban


I've posted this whole thing on Twitter if people want to go signal boost it that would be great.

TWITTER: Thread on #Steem and #SteemHostileTakeOver legal analysis from lawyer and my partner, APSHamilton #Crypto

Interesting. I didn't know the restriction on the ninja-mined stake was already in the code but not switched on. I missed that bit in the story.

For me, there are two stand out takeaways:

  1. incomplete due diligence and/or information was requested but not provided. The latter seems to be the case from the Tron/Consensus Witness meeting.
  2. the behaviour of the exchanges involved, appropriating customer funds for another use.

Good to see that both of these are not my circus, not my monkeys:

  1. For Tron to take up with the previous owner.
  2. For the exchanges to deal with. I hope their customers are kicking up a storm ... and any regulatory bodies that might have an interest.

Meanwhile, for the Steem Community:

  • have we got control of the narrative?
  • and what is the narrative? Is it: we want to work with you, there are benefits for both parties, let's start talking about how it can be and negotiate a way forward within the consensus governance of the blockchain.

Final extraordinary takeaway: how a decentralised global community crossing many times zones, cultures and languages can organise together.

Yes, I wasn't aware that the voting restriction option for the ninja-mined stake was already in the code until very recently either. The use of the term "soft fork" is quite misleading.

Thanks for this summary and the edit following the recording of the meeting with Justin. What interesting times we are living in.

This is crypto history in the making. Steem is back on the crypto map (after being lost in the wilderness for a long time).

Dear @apshamilton

will be taught as a compulsory topic in the blockchain business schools of the future.

There is a saying "you need to people to dance tango". And it's very true saying. I don't think that constant putting blame on one party in this conflict can help us.

It's obvious that witnesses and many whales were hostile from the very beginning and this soft fork escalated conflict. Justin surely brought it to another level. Right now I would say "it's a draw". It's a great time to negotiate and use current leverage.

But will witnesses be willing to understand Justin (he is from completely different culture)? OR will narrative "us versus him" be promoted even more? Soon we will learn.

The fact that ddos attacks on Steemit were taking place (I think it's clear to assume that it's not Justin, but his "enemies" were behind it). Steemauto is down. People who will suffer the most from this fight - will be us, small regular users. That's how I see it at the moment :(

The first lesson students will learn is that decentralised blockchains based on real active communities and open-source software cannot be taken over by a pure financial corporate type play.

Anyway, for the first time ever STEEM is kind of decentralized. Until now we only had group of 20 witnesses, and they all were part of one group. It's like having democracy and 90% politicians are from one team.

Yours, Piotr

It is not "another culture" it is the crypto culture and we are all a part of it. Those of us who are in crypto want decentralization and to control our own income. It is crypto culture he needs to learn, not us having to learn about his upbringing (though it would be beneficial), he is the one who bought a crypto dapp, he is the one who needs to adjust.

Posted via Steemleo

Personally this is going to go down into many future classes on lessons about blockchain technology.

Totally agree due-diligence really sounds like it was skimmed over, Justin did not do his homework.

@CharlieShrem (Twitter)
Jun 18, 2018
“Protecting” “punishing”. No. No one gets to decide those things. You are hair swapping 1 nation state for another one, albeit a digital one. This is the point of crypto, no one should have that power. If you do, then we should just stop wasting everyone’s time.

First good indicator is a meeting has taken place, discussions will hopefully lean toward growing Steem. Decentralized - Power to the People is not purchased by big money (Corporate thinking).

Did not know about the FB and Google, missed this somehow, Oh the powers that be, living in high pedestals really are missing the mark when banning advertising or manipulating for profit in their own interests.

Thanks for interesting assessment, exciting and interesting times we live in.

Steem community is not just any of ordinary netizens on other social media platforms 😅 I hope he knew it by now and thanks for the heads-up

So he can get his $$ back by chasing a couple of law suits. One against ned, and one against facebook and google.

He should use his $$ to win those suits, make us all rich, and take his profits and move the fuck on.

Posted via Steemleo

We control 10 consensus witnesses at this moment. Seven more and we can put the restrictions on the stooges and the exchanges in place again.

While we may bicker incessantly in normal times, when subject to external attack we come together and fight for our online lives.

An interesting reaction indeed.

Hopefully this will might lighten things up a little, in the middle of a crisis...lol

Steem wars part 1..The Empire has a hissy fit.


The Steem blockchain is currently being attacked by a central authority in order to take control of the witnesses. If you are not managing your witness votes, please consider setting @berniesanders as your witness voting proxy by clicking here to help restore the decentralization of Steem.

The fight goes on!

I don't understand where they got such a stack from ...

Hi @apshamilton!

Your post was upvoted by @steem-ua, new Steem dApp, using UserAuthority for algorithmic post curation!
Your UA account score is currently 3.883 which ranks you at #2141 across all Steem accounts.
Your rank has dropped 43 places in the last three days (old rank 2098).

In our last Algorithmic Curation Round, consisting of 81 contributions, your post is ranked at #60.

Evaluation of your UA score:
  • You're on the right track, try to gather more followers.
  • You have already convinced some users to vote for your post, keep trying!
  • Try to work on user engagement: the more people that interact with you via the comments, the higher your UA score!

Feel free to join our @steem-ua Discord server

Great article! The best I've read on the subject, in fact.

Even more community-voted Witnesses are now in top positions:


Put me off posting, all this criminality by Sun and the exchanges. Good to hear of the details from you re the code. It looks like things are stabilizing after that storm on the blockchain.

It's good to see some more details on the facts as they stand, rather than reading the opinions flying around. Glad to see the evidence is being gathered together.

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