Crypto: Kalshi accused of inflating its volumes with thousands of identical orders

Transactions that raise suspicions of wash trading. The last 24 hours have been quite eventful for the Kalshi platform. The leader in predictive markets is now at the center of a storm. The origin? Thousands of identical transactions identified on the perpetual futures market platform.

These transactions have intrigued several internet users and could well hide a significant wash trading operation, conducted to artificially boost the platform's statistics.

Kalshi, which operates in the United States under the license of the Commodity Futures Trading Commission (CFTC), the American regulator of derivative markets, could attract the attention of authorities following these revelations.

Key Points

• A former quantitative trader reports $539 million in daily volume on Kalshi's perpetual ether against $3.1 million in open interest, with a $5,500 order representing 48% to 58% of the total over four days.
• Kalshi denies any artificial inflation and claims that discounts on perpetuals are common practice, from CME to Binance to Hyperliquid.
• The discount program certified by the CFTC brings taker fees down to 0.003% and explicitly excludes transactions related to wash trading.
• No proceedings have been opened by the CFTC against the platform to date.

Kalshi: a $5,500 order that keeps recurring

It all started on September 19 and 20, when former quantitative trader and co-founder of the research firm Stealth Neolab, Beni, began pointing fingers at Kalshi over allegations of wash trading.

<< Here is the irrefutable proof that Kalshi is falsifying its PERP volume. >>
Beni, former quantitative trader and co-founder of Stealth Neolab

He also announced that he had downloaded the entire trading history from Kalshi's public data, in case the company tried to cover its tracks.

According to his revelations, it seems that the platform is witnessing thousands of trades all having exactly the same value: $5,500 flat. A situation that is intriguing.

According to Beni, these figures are far from negligible, and these trades could well represent << literally between 48% and 58% of the TOTAL volume of perpetual futures on ETH >>. Other internet users have echoed and confirmed these data, with volumes of several tens, even hundreds of millions of dollars daily.

Of course, these transactions alone do not prove that Kalshi is behind these maneuvers. However, several points leave the community doubtful. Indeed, the platform reports up to $539 million in volume over 24 hours on ETH perpetual markets, for only $3.1 million in open interest. And that’s where it doesn’t add up.

To put it simply, volume counts every exchange, even if the same contract is bought and sold within seconds. On the other hand, open interest only retains what is actually still open, namely the money still exposed to the market. In a liquid perpetual market, it is common to see daily volume exceed open positions by five to ten times. At Kalshi, the ratio climbs to 174. In other words, every dollar still in play would have changed hands 174 times in a day, or on average once every eight minutes.

Kalshi defends itself: << all platforms offer discounts >>

Kalshi's crypto head, who publishes under the pseudonym IcoBeast, responds that his opponent is mixing two distinct products: predictive markets on one side, perpetual futures on the other.

<< We do not discount crypto predictive markets... All platforms run discount and incentive programs to bring better liquidity to traders. CME does it. Hyperliquid and Binance do too. >>

IcoBeast, crypto head of Kalshi

He also denies allegations that Kalshi handpicks companies allowed to self-clear their transactions, noting that fair access is a regulatory requirement for a designated futures market.

Predictive Markets: Another Debate, Another Inflation

The perpetual futures issue is not the only one causing concern. Meanwhile, several internet users are attacking the historical core of Kalshi: its predictive markets. Here, the accusation is no longer about orders going in circles. It concerns how the platform counts its volume.

On September 20, the account @retardmode claims that << all of Kalshi's volume is inflated >>. According to him, parlay bets, which only pay out if all selections are correct, would represent 61% of the displayed volume. In one day, Kalshi reportedly published $1.91 billion in volume, with only $136 million actually wagered.

The mechanism is simple, and this is where the figure goes haywire. Kalshi does not count the money coming out of the bettor's pocket. It counts the maximum payout of the contract. An event contract pays one dollar if it wins. As a result: betting $1 on a parlay at 14.1 times shows as $14.10 in volume. The more outlandish the parlay, the cheaper the contract, the larger the multiplier. According to retardmode, 48% of the parlay volume comes from combined tickets with 11 different outcomes, almost never winning, but very profitable for the statistics.

IcoBeast accepts the convention. On a predictive market, he says, volume is calculated at the maximum payout, as with Polymarket: buying 100,000 contracts at 30 cents costs $30,000 cash, but counts as $100,000 in volume. So at this stage, it is not proof of a wash trade. It is a counting rule that makes the activity appear much broader than the cash actually engaged.

Wash Trading: No CFTC Proceedings Against Kalshi at This Stage

The CFTC has warned about the general risk: overly generous rewards tied to volume push some participants to trade solely to reach thresholds.

Wash trading refers to the practice where the same actor simultaneously buys and sells to simulate activity. U.S. commodity law already prohibits it under section 4c(a) of the Commodity Exchange Act. However, to date, no proceedings have been announced against Kalshi.

The backdrop of this controversy is reflected in the growth curves. Kalshi's perpetual markets crossed the billion-dollar volume mark in just a few days, a threshold that its predictive markets took 40 months to reach. These figures fuel the standoff with Polymarket, which has returned to U.S. soil through the acquisition of a regulated platform backed by an investment of up to $2 billion from ICE, owner of the New York Stock Exchange. The displayed volume serves as bait for market makers as well as an argument for funding rounds.

The audit of Beni was only possible because Kalshi publishes its transactions in clear view, line by line. In 2019, when Bitwise estimated before the SEC that 95% of the reported volumes on Bitcoin were fictitious, almost no order books were verifiable by a third party. The trader announces a follow-up: his lawyers are reviewing a new batch of data before publication. More to come.