Kalshi has rejected allegations that unusual trading activity in its Ether perpetual futures market represents wash trading, saying the pattern reflects liquidity incentive programs instead. The company also said the Commodity Futures Trading Commission has not contacted it about the activity and that it does not believe a formal examination is underway.
The issue centers on nearly $5 billion in Ether perpetual trades over the past month. Public trading data showed a large number of transactions clustered around roughly $5,500. The repeated trade sizes raised questions among market participants because the activity appeared unusually concentrated.
Liquidity Incentives Underpin Kalshi’s Explanation
Kalshi said its liquidity programs pay market makers for maintaining buy and sell orders at specified sizes and price ranges. The company said these incentives reward available liquidity rather than the number of trades completed.
According to Kalshi, a market maker can maintain fixed-size orders while hundreds of different traders take those orders. If market prices move on other exchanges, traders can profit by executing against quotes that have not yet adjusted.
The company said this pattern explains why the trades can appear repetitive without representing artificial activity.
Kalshi Rejects Wash-Trading Allegations
Kalshi said its platform blocks traders from matching against themselves and monitors for prearranged transactions involving multiple participants. It said it has found no evidence of collusion or wash trading.
However, public trading data does not identify individual participants, making it difficult for outside observers to independently verify the identities or relationships behind the trades.
The controversy comes as Kalshi rapidly expands its perpetual futures business. The company launched crypto perpetual markets this year and has reported substantial trading growth since the products debuted.
For now, Kalshi maintains that the unusual volume reflects efforts to build liquidity in a new derivatives market rather than fabricated demand. The reported lack of direct CFTC contact leaves the regulatory status of the activity unclear.
