Following BIT's Sudden 20% Drop, the BitDAO Community Requests Proof of Funds

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

The BITDAO community, which is backed by Pantera, the billionaire Peter Thiel, the cryptocurrency exchange Bybit, and several other funds, has demanded evidence from trading company Alameda that they still possess the 100 million BIT tokens they bought in November of last year by converting 3.36 million FTT tokens. Alameda was required to hold tokens for a minimum of three years under the token swap agreement.

"BitDAO community is questioning the sudden dump of $bit token caused by Alameda dumping and breaching the 3 yr mutual no sale public commitment. Nothing is confirmed but BitDAO community would like to confirm proof of funds from Alameda," according to Bybit's co-founder Ben Zhao's recent tweet.

Fears from BitDAO may have been sparked by rumors that Alameda is selling off its other token holdings to support FTX's native cryptocurrency.

In four days, FTTT has decreased by 40% to $15. The conflict between FTX and Alameda started last week when CoinDesk revealed that Alameda has significant holdings of FTT coins on its balance sheet. In response, Binance took action to sell its FTT holdings, which caused a panic in the market.

In addition to requesting documentation, BitDAO threatened to take action, maybe by selling the 3,362,315 FTX tokens it had purchased, if Alameda did not provide explanation within 24 hours.

The proposal stated, "If this request is not fulfilled, and if sufficient alternative proof or response is not provided, it will be up to the BitDAO community to decide (vote, or any other emergency action) how to deal with the $FTT in the BitDAO Treasury."

Caroline Ellison, CEO of Alameda Research, responded to Zhou's tweet by saying, "that wasn't us," and she pledged to send the evidence of funding after things had calmed down. Zhou thanked Ellison for the prompt reply and stated that it "it gives a lot of confidence to the BitDAO community."

Ellison's guarantee has undoubtedly soothed the market's anxiety. After falling more than 20% to $0.26 early on Tuesday, the BIT token has now recovered to trade at $0.38, according to data from charting site TradingView.

By fLEXI tEAM