A sudden plunge in the value of crypto token BIT stoked speculation of a fire-sale by Sam Bankman-Fried’s trading house, adding to challenges for the billionaire as he deals with withdrawals from his exchange.
(Bloomberg) — A sudden plunge in the value of crypto token BIT stoked speculation of a fire-sale by Sam Bankman-Fried’s trading house, adding to challenges for the billionaire as he deals with withdrawals from his exchange.
BitDAO, a decentralized community of holders of the token, asked Bankman-Fried’s Alameda Research to provide proof the tokens hadn’t been sold in violation of a lock-in period.
The BIT token fell about 25% on Tuesday morning in London before recovering some of its losses, leading to speculation that the crypto firm might have sold them to raise money. BIT is the native coin of crypto exchange Bybit.
Alameda’s Chief executive Officer Caroline Ellison denied the sale of the tokens in a reply to a post on Twitter from Ben Zhou, Bybit’s co-founder.
The debate risks adding to headwinds for Bankman Fried’s crypto empire, after the price of FTT, the native token of his exchange FTX, tumbled nearly 20% on Tuesday.
This triggered a wider drop in digital asset prices, including Bitcoin and Ether, on concerns about the industry’s stability. The sell-off 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.
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.
A Bybit spokesperson confirmed that BitDAO community has made a request to Alameda for verification of funds.
“It is now up to Alameda to provide the proof required,” the spokesperson said in an email to Bloomberg adding that Bybit is not involved in the ongoing discourse between BitDao and Alameda. Alameda, FTX and Bankman-Fried did not respond to requests for comment.
The BitDAO community has asked Alameda to transfer the BIT tokens to an on-chain address for them to “verify, and hold until the end of the agreement” within 24 hours that ends early afternoon Singapore time on Wednesday.
“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,” according to a post on BitDAO’s community forum.
–With assistance from Joanna Ossinger and Emily Nicolle.
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