It may have been a highly questionable instamine, but from what @smooth says, the initial mining was legit as he was mining alonside others whom he had no relationship with. From what i understand, the instamine was done for legal reasons instead of an ICO or something of that nature. As of now, steem is centralized which is acceptable IMO while it is still in beta. I dont have a problem with it but others may. At least the devs have plenty of funds to dev with.