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Charon is still a moon, nobody upgraded it to dwarf planet.
That seems terribly unfair. Downgrades but no upgrades?
I thought for an object to be a satellite it’s orbital point had to be located inside the body of the other entity.
There’s currently no formal definition requiring that. By that definition, none of Pluto’s five moons would be moons, since they all orbit the same barycenter.
There’s a whole discussion about it here and it looks like it might be reconsidered in the future https://en.wikipedia.org/wiki/Charon_(moon)#Classification