Home Information The balance between decentralization and centralization and how one compliments the other

The balance between decentralization and centralization and how one compliments the other

Decentralization is one of the core goals of TRON, whether it be the decentralization of the web, decentralization of apps, or the decentralization of a crypto exchange. Although decentralization sounds like a perfect solution to the current centralization of the world wide web, which is controls mainly by a limited number of internet giants, we still have a long way to go from building a completely decentralized system. One of the reasons is because ordinary internet users are not ready to make solid judgements from content that has less censorship and are made more readily available.

DeFi, which is the acronym for Decentralized Finance, has become the buzz word of 2020. DeFi allows an ordinary user to stake their cryptocurrency and easily earn an attractive interest that outperforms any traditional saving solutions that are out there. Due to this nature, a lot of hackers have been targetting DeFi system to carry out various hacks on vulnerable DeFi system and scams on gullible DeFi users.

Last month, an anonymous developer team – Shark TRON pulled up an exit scam on TRON with reports suggesting that community’s staked TRX tokens worth up to $10 million are lost. Tron Foundation acknowledged the theft on Twitter and also informed Sharktron token holders that a portion of the missing funds was frozen on Binance.

The reason why such project was able to scam users’ fund easily is because of the openness of the blockchain nature. Anyone who met the requirements can easily create a token on TRON, anyone can easily get their token to be whitelisted on a decentralized trading platform like JustSwap if they met the initial criteria. However, it is not easy for anyone, nor the foundation to stop the project, or undo the damage if all the transactions were carried out on a decentralized blockchain system.

A few weeks have passed since the incident and TronLive is getting more and more reports from the TRON community that no further actions or updates have been given since. There were no words from the foundation or Binance on where the stolen fund is now and whether they will return the fund to the community members who got scammed.

TronLive also received a detailed list of all wallet addresses that currently holds the stolen funds from a user who is affected in this scam incident. It appears that Shark TRON scammers channel the stolen fund to two big crypto exchanges – Binance and Huobi. Many users have reported this fraud to the two exchanges but none of the users succeeded in raising attention. The affected users are simply presented with a complicated process where they will have to report their cases to the local authority, obtain a certificate adjustment notice, obtain copies of police officers’ police certificates and have the police officer contact the exchange directly through email.

Some of the users reported part of the funds already left the exchanges because of the inaction from the exchanges. These funds were withdrawn out of the exchange in a large amount that requires user’s KYC (Know Your Customer), so if the exchange were willing to cooperate with the community users who were affected, there are still hope to track the person behind the scam.

In a separate crypto fraud case on Binance Chain back in October, Binance was able to follow the money trail left by the operator of a scam decentralized finance (DeFi) project and recovered nearly all the stolen funds on its platform. Having raised the funds at launch on Binance Smart Chain in October, the operator fled with users’ cryptocurrency within an hour. However, Binance security team was able to follow the transactions closely and managed to identify the malicious actor in the end. This seems to suggest that some form of centralization in a decentralized project can do some good as well if the powers were not abused and users’ security is prioritized.

The recent Shark TRON fraud case also has a clear transaction trail since all the transactions were carried out on the blockchain. The scammer did not obscure the transaction so even ordinary users can clearly trace that majority of the fund went to Binance and Huobi. Will Binance take action and redo the damage this time? Will Huobi take this matter seriously and work with the community more closely? Will the two exchanges finally make a public announcement on how they will handle the fraud funds and how they can help out the community in this case?

Due to popular community request, TronLive will be tagging these two exchanges to raise more awareness so these exchanges can give the community users a respond on how they will handle this case.

To all the crypto users, please be more alert on all the DeFi or non-DeFi projects out there and have plenty of research before staking your funds elsewhere. Keep in mind that in cryptocurrency, if you do not have access to the private key of the fund, you do not have complete ownership of the fund.