Kalshi Faces Wash Trading Allegations Over Ether Perpetual Futures Volume
An analysis of Kalshi’s ether perpetual futures market suggests that a significant portion of trading volume may be artificial, with nearly half of sampled trades clustered around a repeating dollar value.
Kalshi is facing scrutiny over its ether perpetual futures market following an analysis that identified a pattern of trades clustered around a specific dollar value. The findings raise questions regarding the authenticity of the volume reported on the CFTC-regulated exchange.
Data covering 120,000 consecutive trades in the KXETHPERP market between September 20 and September 21 revealed that 47.2% of the activity fell within a narrow band of a single dollar value. This activity accounted for $307.6 million of the $490.3 million in total notional volume recorded during the 18.5-hour sample period.
The pattern showed trades initially clustering just below $5,500 before shifting to approximately $5,425.55 after 03:00 UTC on September 21. The median interval between these trades was 0.365 seconds, with the market maintaining a pace of roughly 96 trades per minute for over two hours. Notably, the trade size remained fixed in dollar terms rather than ETH quantity, adjusting inversely as the price of ether moved more than 5% during the period.
Similar clustering patterns were observed in other perpetual markets on the exchange. Approximately 29% of bitcoin perpetual trades were found near $2,500, while 24.6% of NEAR trades clustered near $500. Ether exhibited the highest concentration of this activity.
The analysis follows claims from quantitative analyst Beni, who suggested that Kalshi might be inflating volume through repeated transactions and trading incentives. While the public data does not definitively prove wash trading, the exchange’s API does not disclose participant identities, preventing confirmation of whether the same entity controlled both sides of the trades.
The KXETHPERP market also displayed high turnover, with one instance on September 21 showing $612.5 million in 24-hour notional volume against $9.7 million in open interest, representing a ratio of approximately 63 times.
Kalshi’s fee schedule includes maker and taker fees, though the exchange also operates liquidity incentive programs and maintains confidential arrangements with designated market makers. Additionally, the exchange operates an affiliated entity, Kalshi Trading LLC, designed to provide liquidity, though no public data links this affiliate to the identified trades.
Kalshi did not respond to requests for comment regarding the allegations.
