Breach of ‘constitution’: Caretakers freeze 7 EOS accounts

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The EOS network has come under renewed fire following a decision to freeze seven user accounts believed to be carrying stolen funds.

Twenty-one EOS block producers, or BPs, unanimously agreed to suspend the accounts—a move that attracted strong criticism since many believe that the decision was in breach of the blockchain’s so-called ‘constitution’, designed to allay fears over moves of this kind.

Brought forward by BP EOS42, the move is part of a policy designed to improve security, which would allow the ability to claw back funds in some exceptional instances.

“The Block Producers reviewed all evidence in full, which gives an indication that the legitimate owners have both proved their ownership and signalled their will for account suspension through EOS 911. This is not the Block Producers passing any judgement on the merits of the case,” according to a EOS42 statement.

The explanation has done little to reassure the blockchain community, however, with the overt and intentional breach of their own constitution appearing to have undermined the confidence of some users.

According to the EOS constitution, any actions of this kind should be decided by an arbitration process—not the block producers themselves, who are permitted only to execute the arbitration outcome. The decision of the 21 BPs to seize funds in these seven cases, without resorting to the arbitration process, has left a number of developers and commentators in dismay.

The arbitration body EOS Core Arbitration Forum (ECAF) had previously decided not to freeze the accounts in question, because the constitution had not yet been ratified by the wider EOS community. In spite of their position, the BPs took the decision themselves to act contrary to ECAF’s ruling, undermining the constitution before it has even been formally adopted.

Reaching out to ECAF, EOS New York demanded a positive decision from ECAF, while threatening to take matters into their own hands: “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.”

Ultimately, a retroactive order was issued by the collective of BPs on June 19, effectively freezing the funds.

We have pledged to abide by, without delay, any valid arbitration order. We recognize this as valid and will continue to honor the instructions provided by ECAF. The accounts in question will remain “frozen” until such time that ECAF orders another course of action. pic.twitter.com/kGuImMCbwp

— Kevin Rose (@kroseranger) June 19, 2018

Cryptographer Nick Szabo summed up the thrust of users’ concerns in a highly critical tweet, calling the EOS constitution “socially unscalable” and “a security hole.”

In EOS a few complete strangers can freeze what users thought was their money. Under the EOS protocol you must trust a "constitutional" organization comprised of people you will likely never get to know. The EOS "constitution" is socially unscalable and a security hole. https://t.co/WusEqBMGBp

— Nick Szabo (@NickSzabo4) June 19, 2018