$5B in Unusual Trades Raises Wash Trading Concerns on Kalshi

The Commodity Futures Trading Commission (CFTC) is scrutinizing unusual trading activity on Kalshi, a cryptocurrency exchange, after billions of dollars worth of near-identical trades raised concerns about 'wash trading'.

According to the Wall Street Journal, the CFTC is examining the trades before determining whether to open an enforcement investigation. The scrutiny comes after over $5 billion worth of ether trades clustered around $5,500 over the past month.

Kalshi has denied finding evidence of wash trading, stating that the trades were genuine and reflected incentives designed to provide liquidity in its perpetual-futures markets. The company claims that wash trading is explicitly prohibited under its rules.

A working paper by an author using the name 'OctopusTakopi' analyzed 4.1 million publicly reported Kalshi trades worth roughly $11.5 billion between Sept. 5 and Sept. 18, comparing them with hundreds of millions of trades on Binance, Bybit, and Hyperliquid.

The researcher found that about half of Kalshi's perpetual futures volume during the period was concentrated in a handful of repetitive, fixed-dollar trade sizes. The paper also identified similarly concentrated activity in Kalshi's Bitcoin market, where trades of roughly $5,000 and $2,500 accounted for 57% of volume.