BIT price on a slippery slope amid fears that Alameda dumped millions of BIT tokens

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BIT price on a slippery slope amid fears that Alameda dumped millions of BIT tokens

By Charles Thuo - min read
Updated 09 November 2022

The price of BIT, BitDAO’s native token, saw a massive drop in the early hours of November 8 where it hit a daily low of $0.3031 before slightly rebounding as the day progressed. At press time, BIT was trading at $0.3888, a drop of about 4.48% in the past 24 hours.

The sudden price drop was a result of fears that Alameda Research, a sister firm to FTX that has been at the centre of the ongoing FTX financial crisis, had dumped about 100 million BIT tokens.

BitDAO has requested proof of funds from Alameda

BitDAO signed a token swap and hold an agreement with quant crypto trading firm Alameda Research on November 2021. Following the agreement, BitDAO swapped 100 million BIT tokens for 3,362,315 FTX tokens (FTT). The two entities had agreed not to sell the tokens for the next three years, which would be up to November 2, 2024.

BitDAO is now threatening to terminate the agreement following fears that Alameda has breached the agreement by dumping about 100 million of the BIT tokens it held after the swap. BitDAO has today filed a proposal asking Alameda to provide proof of funds through an on-chain address.

BitDAO has asked Alameda to respond within the next 24 hours, failure to which BitDAO could take action with the over 3.3 million FTT tokens that it holds after the swap.

In the released BitDAO communication, BitDAO 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.”

Alameda says it has nothing to do with the BIT plunge

Responding to BitDAO, Alameda CEO Caroline Ellison has said that the firm has nothing to do with the BIT price fall. The CEO said:

“Busy at the moment but that wasn’t us, will get you proof of funds when things calm down.”

It is unclear whether Alameda will be able to provide the proof of funds within the 24 hours ultimatum that BitDAO gave. In the event the proof of funds is not produced, BitDAO may opt to sell its FTT tokens which would only complicate things for the already stressed native token of FTX exchange.