According to a Steemit post, EOS has frozen seven accounts that were subject to a phishing scam. The move, initiated by the 21 block producers (BPs) might seem like a logical decision, as it will stop fraudsters from relieving several users from more than $20,000 worth of the digital currency.

However, the freeze also raises serious questions about the scale of decentralization on the fifth-largest virtual currency by market cap. In order to understand the motives behind the halt, we must quickly review the latest developments within the EOS network.

The last couple of weeks have been quite hectic for EOS as it underwent a huge transition, moving from ethereum blockchain to EOS own distributed ledger. Due to the migration, EOS token owners had to obtain new wallet addresses and understandably some of them have fallen prey to fraudsters, revealing their private keys.

Unfortunately, the launch was further hindered, as the BPs were forced to freeze the blockchain, following some technical difficulties. Nonetheless, the problem was solved in a couple of hours and did not seem like anything more than a brief hiccup.

However, the details of a new “freeze” have now surfaced as reportedly the BPs have unanimously decided to freeze the seven compromised accounts in order protect the holders who purchased EOS tokens during a year-long ICO, which raised over $4 billion, by far a record amount for any ICO.

The impetus for the freeze came from the EOS911 initiative that has been adopted to help protect users with compromised private keys against phishing scams. However, the way freeze was implemented caused severe criticism as the BPs discussed the decision over a two-hour-long Telegram conference call and then simply disabled the nodes and backed up the data.

However, the EOS constitution clearly states that only arbitrary bodies of the EOS blockchain can authorize such a move, while BPs are merely an executive cog in the system, only able to execute their decisions. Apparently, the BPs decided that the constitution has not been ratified, thus can be ignored.

BPs explained their actions in a Steemit post, claiming that, “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.“

Understandably, the news were met with significant backlash from the crypto community as the BPs violated one of the core principles of all cryptocurrencies – decentralization.

Some randomly elected 3rd party arbitrator is now making “orders” to #EOS block producers. In this case, regarding locking user accounts. Can’t even make up comedy this good. pic.twitter.com/Dfs7UH0f5T — eric.eth (@econoar) June 19, 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. https://t.co/yCh6IIPGqp — Charlie Shrem (@CharlieShrem) June 18, 2018

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

EOS went on to explain that any compromised account can be unlocked and that EOS Core Arbitration Forum (ECAF) filed a submission, while the BPs await ruling on the frozen account status.

EOS has been troubled by security issues recently, with a Cornell University blockchain researcher Emin Gün Sirer claiming the cryptocurrency will cause a “massive exchange hack” due to its vulnerabilities. Similar claims were echoed by a Chinese digital security company Qihoo 360, which detected several “high-risk vulnerabilities” within the EOS code, which have since been patched.

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