A crypto token whose investors include billionaire Sam Bankman-Fried’s trading house Alameda Research took a wild ride, dipping and then recovering as worries over potential forced selling by the firm arose and then were dispelled by Alameda.
(Bloomberg) — A crypto token whose investors include billionaire Sam Bankman-Fried’s trading house Alameda Research took a wild ride, dipping and then recovering as worries over potential forced selling by the firm arose and then were dispelled by Alameda.
BitDAO, a decentralized community of holders of the BIT token, asked Alameda to provide proof the tokens hadn’t been sold after the coin slumped about 25% suddenly on Tuesday morning in London.
The concern was that the crypto firm might have dumped them to raise money as questions swirled about the health of Alameda, a large player in the market. Alameda Chief Executive Officer Caroline Ellison denied the sale of the tokens in a reply to a post on Twitter from Ben Zhou, co-founder of the exchange that supports the BIT token, after which it recovered most of its losses to trade at about 39 cents, according to CoinGecko.
The big swing exemplifies the crypto market’s renewed jitters, reminiscent of the turbulence that rocked the industry in the spring.
This time, the worries center on Alameda’s balance sheet and its reliance on a token, FTT, created by FTX. It all started after Changpeng Zhao, the chief executive officer of exchange Binance, announced plans to sell $530 million of FTT, in a Twitter post on Sunday.
FTT has since dropped steeply, raising concerns about Alameda’s ability to weather the decline. Alameda’s Ellison has said the firm has more than $10 billion in assets on its balance sheet.
BitDAO had swapped 100 million BIT with Alameda for 3.36 million FTT tokens just over a year ago with a three-year no-sale commitment, according to a thread posted on BitDAO’s community forum.
The BitDAO community asked Alameda to transfer the BIT tokens to a wallet address for them to “verify, and hold until the end of the agreement” within 24 hours that ends early afternoon Singapore time on Wednesday.
BitDAO later said Alameda provided the proof.
–With assistance from Joanna Ossinger and Emily Nicolle.
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