Bybit CEO Ben Zhou clarified the controversy surrounding “rat trading” and “sorority circle” through an AMA, emphasizing the company’s transparent listing process and strict risk control measures.
Yesterday (3rd), the internal operations of Bybit, one of the five major cryptocurrency exchanges, attracted a lot of attention, especially regarding the issues of “rat trading” and “sorority circle”. Bybit’s CEO conducted an AMA (Ask Me Anything) to respond to the allegations and clarify the accusations, explaining in detail the company’s listing criteria and internal review process.
The controversy originated from accusations made by some well-known KOLs in the Chinese-speaking region on social media. According to their descriptions, there were conflicts of interest between Bybit’s internal spot and listing team and the external institution Deltalab, and there may have been improper conduct. KOL DeFi Small Miner’s document pointed out that these internal members (especially high-level personnel within Bybit) were also members of DeltaLab, which may create conflicts of interest, allowing certain tokens to be listed first and using internal information for market manipulation, potentially leading to insider trading (i.e. “rat trading”).
In addition, the accusations also mentioned the so-called “sorority circle” issue within Bybit, referring to conflicts of interest among employees who are also members of external institutions, which may affect the company’s listing decisions and impact the fairness and transparency of the exchange, potentially harming the interests of investors.
Key Issues
The article mentions that Bybit’s new spot and listing head, Emily, was appointed by the CEO and COO.
Listing decisions are advised by Emily and the executives associated with Deltalab, according to the CEO.
The CEO and COO have publicly expressed support for Emily’s decisions and are currently strongly supporting the spot team she is in.
Deltalab’s key members (two out of four, Zelda and Ruby) provide services such as token and exchange listing, liquidity (market-making) design, token financing, etc.
Ruby, after becoming the manager of Bybit’s listing team, publicly stated that she is an active cryptocurrency trader and openly shared trading prices and the cryptocurrencies she is trading.
Eight Key Doubts
The document compiled the core issues from the document, relating to the two Bybit employees associated with Deltalab. It circulated on the internet that these two are close acquaintances of Emily, the spot and listing head. Employee 1, Ruby, works under Emily and was promoted to listing supervisor in August this year; Employee 2, Zelda, joined as a new asset research director in early September.
Why can Ruby, after joining Bybit since the beginning of 2024, still retain her status as a core member of Deltalabs, especially after taking on a key role in Bybit’s listing team in August?
After joining Bybit, why can Zelda still maintain her status as a core member of Deltalabs?
What is the relationship between Deltalabs and Bybit? How does this small institution’s services to cryptocurrency projects affect them?
Why hasn’t Deltalabs’ website removed the information about Ruby and Zelda still holding important positions?
Why did Emily recruit two core members from Deltalabs to join Bybit’s listing team in such a short period of time? Was it based on professional competence or personal relationships?
How does Bybit make recruitment decisions? Is there a lack of proper due diligence, especially in ensuring no conflicts of interest?
Why is Ruby able to openly discuss assets related to Bybit’s spot business on Twitter and engage in activities that may raise suspicion of insider trading, without facing any punishment?
Why hasn’t Emily taken any action against Ruby’s public behavior, despite these actions involving obvious conflicts of interest?
Below are the key issues addressed by Bybit’s CEO in response:
Listing Process
Ben Zhou explained that Bybit’s listing process is conducted by a professional team and not controlled by a single individual. He emphasized that when making listing decisions, the company comprehensively evaluates various factors such as market demand, project fundamentals, and team background, and ultimately decides through an internal voting mechanism. A random employee is then assigned to communicate with the project team. He emphasized:
When selecting tokens for listing, Bybit considers multiple factors such as project fundamentals, community support, and liquidity. He assured that all listing processes are open and transparent, and the company does not intervene in market price fluctuations to avoid market manipulation.
He emphasized that the company has a strong risk control team internally, responsible for monitoring risk behaviors including price manipulation and taking strict measures against market makers involved in improper activities. He stated:
In the past, some cases of market manipulation have been discovered, such as market makers investigated by the FBI, who have been blacklisted by Bybit as early as six months ago.
Delta Lab Incident Clarification
Ben Zhou responded to the questions in the live broadcast together with two Bybit employees, Zelda and Ruby. Although both employees were core members of DeltaLab, they clearly stated that DeltaLab was a project they were involved in before joining Bybit and did not involve any actual business operations of DeltaLab within Bybit. They also regretted that no income was generated from DeltaLab in the past. Ben Zhou explained that an internal investigation will be conducted, and it is understood that DeltaLab has not conducted any trading within the Bybit exchange. Finally, he emphasized that the current situation does not constitute conflicts of interest or insider trading, but Bybit will conduct internal reviews of these two employees.