Kalshi said Tuesday that the Commodity Futures Trading Commission has not contacted the company, pushing back against a report that the regulator is reviewing roughly $5 billion in unusual Ether perpetual futures trades on its platform. The prediction market operator denies the activity amounts to wash trading and attributes the pattern to its own liquidity incentive programs.
The Wall Street Journal reported Tuesday that the CFTC is examining a run of rapid, similarly sized trades in Kalshi’s Ether perpetual market before deciding whether to open a formal enforcement investigation. Nearly $5 billion in trades of nearly identical size have crossed the platform since August, according to the report.
A company spokesperson told multiple outlets that Kalshi has not been contacted by the CFTC and rejected the wash trading label outright. In a September 22 blog post titled “The Facts Behind Kalshi’s Perpetuals Volume,” the company argued that critics misread how its volume is counted and how its incentive programs work.
The numbers that started it
Suspicion first surfaced when a quantitative analyst, a co-founder of research firm Stealth Neolab who posts as Beni, flagged that Kalshi’s ETH-PERP contract logged $539 million in 24-hour trading volume against just $3.1 million in open interest. That is a ratio of 174 to 1. High volume paired with tiny open interest is a classic signature of artificial churn, where the same capital buys and sells back and forth to inflate activity numbers while almost nothing is actually at stake.
A CoinDesk analysis of the exchange’s public trade records added weight to the concern. Between September 17 and 20, trades valued within $2 of $5,499 accounted for $7.7 million, or 57 percent, of the $13.5 million in Ether transactions sampled. On the bitcoin market, two recurring trade sizes of roughly $2,500 and $5,000 made up 54 percent of the $8.5 million sampled over the same window. Volume is one of the first metrics traders use to judge whether a market is liquid enough to enter and exit without moving the price, which is why inflated figures matter beyond optics.
| Market | Sampled volume | Recurring trade sizes | Share of sample |
|---|---|---|---|
| ETH-PERP | $13.5 million | Near $5,499 | 57% |
| BTC perps | $8.5 million | About $2,500 and $5,000 | 54% |
Kalshi’s defense: pay for liquidity, not for volume
Kalshi’s explanation centers on two fee programs described in public filings. Since July, the company has run a temporary program that pays self-clearing members a month-end rebate equal to the fees they paid on perpetual futures trades. Kalshi says the CFTC’s own filing rules block net-negative fees on a per-trade basis, so no firm can literally be paid to trade more. While that program runs, self-clearing members effectively pay no net fees on perps.
A September 2 update to the same rebate filing has drawn separate criticism. It would rebate crypto-perp taker fees down to 0.3 basis points and leave makers a net 0.3 basis point credit. Critics circulated that document as evidence the exchange was subsidizing churn. Kalshi’s response is that any firm meeting CFTC requirements can self-clear, and that the programs reward order availability rather than raw volume.
The company also noted that the viral chart that started the latest round of criticism measured prediction market category share as reported by Artemis, not Kalshi’s perpetuals platform, and that most of the ensuing commentary on X conflated the two products. A trading bot linked by critics to the repeating trades was reported to have halted after the allegations surfaced.
Why perpetuals draw regulatory attention
Perpetual futures are a contract type born in offshore crypto markets. They have no expiry date, settle continuously against a funding rate, and allow leverage far beyond what traditional futures venues offer. US regulators long treated them as off-limits domestically, which is why Kalshi’s entry into the product is itself notable.
The CFTC approved Kalshi’s BTCPERP bitcoin perpetual contract in May through a voluntary review process, an order that came with an explicit caveat that the perpetual design may not suit every asset class. The agency encouraged firms to submit other perpetual products for review rather than assume approval transfers. Ether perpetuals on the platform followed, and volumes grew quickly enough that by late September the ether market was posting nine-figure daily volume figures.
That speed is exactly what has drawn scrutiny. A market where reported volume runs 174 times open interest raises a fair question about what the numbers mean, and the CFTC’s examination is aimed at answering it before any enforcement decision.
Stakes for a fast-growing venue
The scrutiny lands on a company riding a steep valuation curve. Kalshi completed a $1 billion Series F round this year at a $22 billion valuation, and PitchBook’s latest report puts its base case valuation at $30.4 billion, with a bull case of $42.1 billion and a bear case of $22.8 billion. The firm has pushed hard into crypto derivatives and prediction markets alike, and institutional infrastructure providers such as Talos have built integrations to route professional order flow into its event contracts and crypto perpetuals.
Wash trading allegations carry real consequences beyond reputation. Exchanges live on the credibility of their volume statistics, which feed market data vendors, index providers and institutional risk models. If a regulator concludes that incentive programs manufactured volume, the fix would likely mean restructuring the rebates, and rivals would cite the episode in pitches to traders. If the CFTC accepts Kalshi’s explanation, the episode becomes a case study in how regulated venues can run liquidity programs without crossing into fake activity.
For now the matter sits at the examination stage, with no enforcement case opened. The CFTC has not commented publicly beyond the reported review. Kalshi, for its part, has kept trading live and published its rebuttal in full. Which reading the agency settles on will decide whether this stays a data dispute or becomes a test case for how perpetuals are supervised on regulated US venues.