Steem Plot Twist: Bittrex Refuses to Return $5M ‘Rescued’ Hardfork Coins

Cryptocurrency exchange Bittrex has refused to return the 23 million Steem coins it received during the fantastical Steem hard fork saga.

During May 20’s Hardfork 0.23, the accounts of 64 Steem stakeholders were to be “seized,” as was revealed by an examination of the code. However, at the last minute, someone from inside Steem managed to redirect the $5 million bounty to Bittrex.

This gave victims of the seizure some hope, particularly because the funds were sent without a memo-key – meaning the sender could not retrieve the coins even if they wanted to.

However, their hopes were dashed on May 21, when the co-founder of Bittrex announced the exchange would be respecting the integrity of the hard fork. In other words, Bittrex has decided not to remediate in the affair, and won’t be returning the coins to their original owners.

Richie Lai of Bittrex wrote: “While I am among those frustrated by the outcome, my own personal feelings do not matter. The fact is, we only interpret the data on the blockchain, and in this case, the consensus of the blockchain, regardless of how it was reached, agreed that the funds from those 64 accounts be moved to the “community321″ account.”

Stealing is Bad, Justin

The “community321″ account was the anonymous account set up to receive the seized funds during hard fork 0.23. In a last-minute plot twist, the person operating the account redirected all the funds to Bittrex.

They also left a note on the blockchain for Justin Sun and prominent Steem witness group, Triple A, which noted (in Korean): “Stealing is bad.”

Witnesses Quit, Developers Leave

Two days before the hard fork, Steemit Inc developer JustinW announced he was leaving the company. JustinW was one of the last developers who had remained following Justin Sun’s buyout of Steemit Inc.

What’s more, fifteen Steem witnesses switched off their nodes in the 24 hours leading up to the hard fork. Many of those were the same alleged “sock-puppet” witnesses voted in by Justin Sun previously—so why the sudden change of heart?

According to Mark Hensley, a stakeholder with close to $1 million at stake: “They shut down their witness nodes in mass before the hard fork. They didn’t want to be criminals, I suppose.” Hensley has close to $1 million worth of Steem at stake in this affair.

That’s backed up by blockchain data which shows Justin Sun’s overseer account frantically removing the dissident witnesses in question, and replacing them with new witnesses created out of thin air. Hilariously, this also contradicts Sun’s recent tweet, which proclaimed he would have no influence over the hard fork in any way.

Hensley optimistically told us before Bittrex’s announcement that he thought his funds were now “safu.” Although, he cautiously acknowledged that there could be unforeseen developments ahead.

“Now the funds are safu with Bittrex and Justin would need to hard fork out an entire exchange (he is a crazy bastard so who knows) to get them back. It’s close to checkmate, but the story isn’t over,” said Hensley.

Given the official announcement by Bittrex, it looks like Hensley’s caution was well justified. What happens to the coins now is anyone’s guess.