BitDAO, a DeFi project “building governance, treasury management, and DeFi products” linked to crypto exchange ByBit, has called out DeFi-focused trading firm Alameda Research to request proof that it didn’t break a three-year agreement to not sell each other’s tokens.
Against the backdrop of an Alameda in crisis, prompted by revelations that much of its assets were made up of potentially overvalued FTT and exacerbated by Binance’s decision to begin offloading its FTT holdings, suspicions were raised when the price of BIT, BitDAO’s native token suddenly dropped by ~20%.
The price dump came shortly after a drop in the price of FTT, which had been defended at $22, an apparently crucial price for Alameda, for some time.
While FTT is technically crypto exchange FTX’s token, not Alameda’s, the two firms are closely linked through Sam Bankman-Fried (SBF), who has been in conflict with Binance CEO Changpeng Zhao (CZ) for some time. This feud now looks set to end with Binance acquiring FTX.
BitDAO’s accusations stem from the fact that, in October 2021, it and Alameda conducted a token swap of 1% of the total supply of BIT and FTT; 100 million and 3.4 million tokens, respectively. In DeFi, token swaps generally serve to diversify treasury assets between projects, allow for participation in each other’s governance systems, and create strategically aligned partnerships. In this case, the governance proposal includes a “public commitment not to sell each other’s tokens for three years.”
With worries that Alameda may have sold a portion of these tokens out of desperation, concerns began to mount that BitDAO, which launched a community proposal to “monitor commitments” to the deal, would respond by offloading its FTT, putting further pressure on the embattled Alameda.
A few weeks after receiving the tokens, they were all transferred (via an intermediary address 0xaeda…) to FTX. Then, this morning, shortly after CEO Caroline Ellison’s denial that Alameda had been responsible for the dip in BIT’s price, funds began to return from various sources.
The majority (92M) were returned from the FTX address, but the remaining balance came from other sources, including Coinbase and what appears to be another exchange hot wallet.
While this doesn’t constitute proof of selling, nor does it prove that Alameda didn’t break its agreement with BitDAO by selling its BIT holdings. It only proves that the company was able to come up with the necessary 100 million “proof of funds” from a variety of sources.
As the sale was executed via an exchange rather than directly on-chain, it’s impossible to verify who was responsible. However, suspicions have ranged from the more obvious Alameda (which moved 4.6 million BIT shortly before the dump and is looking for any and all liquidity it can lay its hands on) to BitDAO-linked fund Mirana Ventures (which may be looking to create an excuse for BitDAO to liquidate the FTT in response).
Then again, this may even have been an offensive move from Binance, looking to sow suspicion between the two organizations and prompt BitDAO into dumping more FTT onto the market.
Regardless, BitDAO seems to have been satisfied by the return of the funds to the original address and is willing to move on, under the recommendation that the 100 million BIT stay where they are for reasons of “community confidence” for the remainder of the three-year no-sale commitment.