Kalshi Faces Accusations of Faking Crypto Trading Volume

Kalshi, a prediction market platform, is facing backlash over accusations of faking much of its cryptocurrency trading volume. The core issue revolves around potential “wash trades,” where buying and selling the same financial instrument back and forth creates an illusion of increased market activity. Industry observers have pointed out suspicious trading patterns in Kalshi’s ethereum (ETH) perps, with repeated trades of exactly $5,500 in contracts accounting for roughly half of the volume in recent days.

Kalshi offers cryptocurrency perpetual futures markets, or “perps” for short. The company charges maker and taker fees to perp market participants. However, the accusing parties found that “self-clearing members” qualify for rebate programs, paying a tiny fraction of the posted fees, less than 1/100th of 1%. Crucially, the “taker” fees match the “maker” net, allowing a theoretical entity enrolled in this program to buy and sell the same assets with another enrolled entity and pay zero net fees.

In response to the accusations, Kalshi published a blog post stating that “wash trading is explicitly banned in our rulebook.” The company also reminded readers that the CFTC regulates their activity and that the financial body prohibits wash trading. Kalshi called the ETH trades in question “genuine economic activity” and asserted that they have surveillance watching for pre-arranged trades. Despite Kalshi’s denials, industry observers remain skeptical, and the controversy continues to unfold.