BitDAO Community Questions Alameda Over Alleged Dump of BIT Tokens

The BitDAO community said they will vote on what to do with their FTT tokens if Alameda cannot prove that they continue to hold BIT tokens as promised. Alameda promised to provide evidence soon.

BitDAO, one of the largest decentralized autonomous organizations (DAOs), entered the FTX-Alameda drama Tuesday after the DAO’s native token, BIT, fell 20%. The BitDAO community backed by crypto exchanges Bybit, Pantera, billionaire Peter Thiel and several other funds, is asking trading firm Alameda to prove it continues to hold the 100 million BIT tokens they acquired last November by converting 3.36 million FTT tokens.

On November 2, 2021, BitDAO and Alameda exchanged 100 million BIT tokens for 3,362,315 FTT tokens and publicly committed to hold each other’s tokens for three years, until November 2, 2024. The BitDAO community quickly responded to BIT’s sudden price drop on November 8, 2022, suspecting Alameda of selling BIT tokens and violating a public commitment to a three-year mutual ban.

To narrow down the reasons for the BIT price drop, the BitDAO community requested an allowance for monitoring and verifying Alameda’s commitment to hold BIT tokens. BitDAO demonstrated its commitment by sharing addresses showing that the BitDAO Treasury owns all 3,362,315 FTT tokens. In return, the Alameda community set a 24-hour deadline to prove their commitment.

Alameda Responds

BitDAO’s concerns could stem from speculation that Alameda is liquidating its other token holdings to protect FTX’s native cryptocurrency.

FTTT fell 40% to $15 in four days. The FTX Alameda drama began last week after CoinDesk reported that Alameda holds a significant amount of FTT tokens on its balance sheet. In response, Binance began liquidating its FTT holdings, causing panic in the market.

The BitDAO community has also implicitly threatened to take action and possibly sell the received 3,362,315 FTX tokens if Alameda does not provide clarification within 24 hours.

Summarizing the matter, Ben Zhou, co-founder of cryptocurrency exchange Bybit, said that while nothing has been confirmed, the BitDAO community would like confirmation of Alameda’s proof of funding. Caroline Ellison, chief executive of Alameda Research, has spoken out against the allegation, confirming there was ultimately no wrongdoing by the company and promised to share the proof of funds.