Alameda Must Provide Proof of Funds After Sudden 20% Drop in BIT

Key points: 

• The BitDAO community has asked Alameda to prove that it still owns the 100 million BIT tokens.
• BitDAO’s concerns may stem from speculation that Alameda is liquidating its other token holdings to protect FTX’s native cryptocurrency.
• Its community issued a veiled threat to take action and possibly sell the 3,362,315 FTX tokens obtained if Alameda did not provide clarification within 24 hours.

BitDAO, one of the largest decentralized autonomous organizations (DAOs), entered the FTX-Alameda drama on Tuesday after the DAO's native token, BIT, fell 20%.

The community behind BITDAO, which is backed by cryptocurrency exchanges Bybit, Pantera, billionaire Peter Thiel and several other funds, has asked trading firm, Alameda, to prove that it still owns the 100 million BIT tokens it acquired through a switchover last November. 3.36 million FTT tokens. Token swap transactions require Alameda to hold the tokens for at least three years.

“The BitDAO community questions the sudden dumping of $BIT  tokens due to Alameda’s dumping and breach of a 3-year mutual public commitment not to sell. There is no confirmation, but the BitDAO community wants confirmation of proof of funds from Alameda,” Bybit co-founder Ben Zhao tweeted.

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

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

The BitDAO community also issued a veiled threat to take action and possibly sell the 3,362,315 FTX tokens obtained if Alameda did not provide clarification within 24 hours.

“If the request is not approved and sufficient alternative evidence or response is not provided, it is up to the BitDAO community to decide (vote or other contingency action) what to do with BitDAO Treasury’s $FTT,” it said in the advice.

Caroline Ellison, CEO of Alameda Research, responded to Zhou's tweet "not us" and promised proof of funding once things calmed down. Thanks to Ellison's quick response, Zhou said, "It gave the BitDAO community a lot of confidence.

Ellison's reassurance certainly calmed the market's nerves. After falling more than 20 percent to $0.26 earlier on Tuesday, the BIT token has recovered and is trading at $0.38, according to charting platform TradingView.

BitDAO also announced a proposal that would allow the community to monitor and verify compliance with the FTT-BIT exchange commitments.