Kalshi has pushed back against allegations that unusual trading activity in its Ether perpetual futures market constitutes wash trading, attributing the pattern instead to its liquidity incentive programs. The company also said the Commodity Futures Trading Commission (CFTC) has not contacted it about the activity and that it does not believe a formal examination is underway.

At the center of the dispute is nearly $5 billion in Ether perpetual trades over the past month. Public trading data showed a large number of transactions clustered around roughly $5,500, and the repeated trade sizes raised questions among market participants because the activity appeared unusually concentrated.

Perpetual futures are derivative contracts without a set expiration date that track an underlying asset's price, and they have become one of the most heavily traded instruments across crypto markets. That scale is part of why the makeup of a venue's trading volume draws attention: liquidity and activity figures are widely used to gauge how deep a market really is.

Liquidity Incentives Cited in Kalshi's Explanation

Kalshi said its liquidity programs pay market makers for maintaining buy and sell orders at specified sizes and price ranges. According to the company, these incentives reward available liquidity rather than the number of trades completed.

Kalshi explained that a market maker can maintain fixed-size orders while hundreds of different traders execute against them. If market prices move on other exchanges, traders can profit by filling quotes that have not yet adjusted. The company argued that this dynamic explains why the trades can appear repetitive without representing artificial activity.

Kalshi Denies Artificial Trading

Kalshi stated that its platform blocks traders from matching against themselves and monitors for prearranged transactions involving multiple participants. It said it has found no evidence of collusion or wash trading.

Wash trading generally refers to transactions structured so that the same party effectively controls both sides, producing the appearance of volume without a genuine change in ownership. The practice is prohibited under the US derivatives rules the CFTC enforces, which is why the regulatory dimension remains relevant even though Kalshi says no formal examination is underway.

However, public trading data does not identify individual participants, making it difficult for outside observers to independently verify the identities or relationships behind the trades. Without participant-level disclosure, independent confirmation would rest on what Kalshi or regulators choose to make public.

The scrutiny comes as Kalshi rapidly expands its perpetual futures business. The company launched crypto perpetual markets this year and has reported substantial trading growth since the products debuted.

For now, Kalshi maintains that the unusual volume reflects efforts to build liquidity in a new derivatives market rather than fabricated demand. The reported lack of direct CFTC contact leaves the regulatory status of the activity unclear. Whether Kalshi releases participant-level detail, or the CFTC's posture changes, could shape how the question is ultimately resolved.

Source: CryptoMeter io