Key Insights:
- Kalshi under scrutiny for wash trading claims after posting massive trading volume
- Crypto perps volume on the platform is reportedly dominated by one trade
- Kalshi has denied these allegations, noting that they stem from a misunderstanding of its platform.
Prediction market platform Kalshi is confronting questions regarding trading activity within its cryptocurrency perpetual futures after a researcher claimed that unusually repetitive transactions artificially boosted reported volume.
Beni, the pseudonymous co-founder of Stealth Neolab, stated that Kalshi’s ETH perpetual contract registered approximately $539 million in 24-hour volume compared to roughly $3.1 million in open interest.
The researcher also pointed out a concentration of uniformly sized transactions, suggesting the pattern merited investigation for potential wash trading.
Kalshi pushed back against that assertion on Sept. 22, explaining that the activity represented authentic trading between numerous takers and a market maker, rather than coordinated efforts to manufacture volume.
Kalshi Wash Trading Claims Center on ETH Perpetuals
Beni indicated that a primary indicator of wash trading on Kalshi is the abnormal volume of $5,500 trades, noting that these transactions make up about 58% of the total ETH perps volume across four distinct days.
Additionally, he drew attention to the remarkably modest size of the largest open position within the ETH perpetuals market, pointing out that the leaderboard’s top trader held an open position of just $17,598 despite the enormous volume.
Conversely, Kalshi product development lead IcoBeast.eth contested the claim, arguing that wash trading is illogical when trading fees are in play.
Yet, Beni countered that Kalshi submitted a filing to the Commodity Futures Trading Commission (CFTC) three weeks prior to prolong a rebate program. This arrangement permits certain self-clearing members (SCMs)—effectively acting as market makers—to incur zero fees because a 0.3% maker rebate neutralizes a 0.3% taker fee.
He mentioned that Jump Trading serves as one of Kalshi’s SCMs and previously established a partnership with the exchange to trade liquidity for equity, which he contends creates an incentive to artificially boost trading volume.
He remarked: “Because Kalshi made a deal with Jump Trading exchanging liquidity for equity, meaning that they’re directly incentivized to make the ‘numbers’ look good.”
Meanwhile, separate accusations have emerged suggesting wash trading may also impact Kalshi’s prediction markets. One participant pointed to the Mamdani “2028 Democratic presidential nominee” market, observing that a user purchased and sold $1 of the contract every two seconds, accumulating $2 million between August 1 and September 19.
Kalshi Denies Wash Trading Allegations
Nevertheless, Kalshi has disputed the claims. IcoBeast.eth, who led the defense, attributed the accusations to a fundamental misunderstanding of the platform’s mechanics.
He explained that Kalshi’s elevated volume figures represent the maximum potential payout instead of the actual cash expended, noting that Polymarket employs the exact same reporting convention.
Kalshi additionally released a blog post entitled “The Facts Behind Kalshi’s Perpetuals Volume.” The enterprise emphasized that it strictly prohibits wash trading in any form, though it verified that a rebate program remains active.
The company maintained, however, that platform incentives are designed for liquidity rather than wash trading, stating, “These structures do not provide an incentive for traders to wash trade because they do not reward volume traded, just resting liquidity provided.”
IcoBeast also issued an apology to Beni for initially dismissing his assertions, adding that the company will improve its explanation of incentives and implement stronger safeguards. The firm maintains that wash trading is entirely absent from its platform.
This article is for informational purposes only. Allegations of market manipulation remain unproven unless established through regulatory findings, court proceedings or other verified evidence.