Kalshi denies CFTC contact over ‘unusual’ $5B trading activity in Ether perpetual futures market

Context of the CFTC Review

The Wall Street Journal reported that the Commodity Futures Trading Commission is examining a cluster of rapid trades on Kalshi’s Ether perpetual futures market, with individual trade sizes near $5,500. The report cited a source familiar with the matter and noted the volume of over $5 billion in this trading pattern over the past month.

Kalshi stated it had not been contacted by the regulator and considers these trading data patterns typical for liquidity incentive programs seen across financial markets.

Elisabeth Diana, Kalshi’s head of communications, described rumors of an investigation as competitor-driven misinformation and advised skepticism toward information spreading on social media platforms.

Trading Structure in Ether Perpetual Futures Market

Kalshi’s perpetual futures allow traders to speculate on Ether prices without owning the asset.

Trades around $5,500 in size contributed significantly to total volume, surpassing $5 billion in the last month.

The Wall Street Journal also reported that Kalshi offered some traders opportunities to purchase company equity upon meeting volume targets, waived trading fees, and provided cash incentives monthly to encourage liquidity provision.

Kalshi clarified in a blog post that the repeated trade sizes are due to programs compensating market makers to maintain buy and sell orders of fixed size within a set price range. These payments reward order availability, not trade volume, and the blog did not address the equity purchase opportunities mentioned by the Journal.

Kalshi refutes wash trading allegations

Market makers facilitate market operations by continuously quoting buy and sell prices, enabling other traders (takers) to transact easily.

Kalshi explained that the fixed-size trades reflected behavior of a single market maker posting resting orders, which multiple takers executed.

They pointed out that takers generally profited by trading at outdated prices posted by the market maker, who consequently incurred losses.

This pattern indicates genuine economic activity rather than wash trading, which typically yields increased volume without profit or loss to either side.