Kalshi said the Commodity Futures Trading Commission has not contacted the company and it does not believe it is under formal investigation, responding to reports of regulatory scrutiny over trading activity on the prediction market platform.
"We have not been contacted by the CFTC and don't believe there is any formal examination," Kalshi spokesperson Elisabeth Diana said. "As we've said, these data patterns are typical of liquidity incentive programs and common in financial markets."
Trading volume patterns
A majority of trading volume on Kalshi's bitcoin and ether perpetual markets consisted of identically-sized trades, with many ether trades clustered around $5,500 and bitcoin trades around $2,500 or $5,000. The Wall Street Journal reported that the CFTC was examining this trading activity after nearly one million trades in an ether market were placed in similar amounts, reviewing the data before deciding whether to open an enforcement investigation.
Research from Beni, a co-founder of Stealth Neolab, found that trades of exactly $5,500 made up 48% to 58% of notional volume on four days in September on Kalshi's ether perpetual market. The ether perpetual recorded approximately $539 million in 24-hour volume against $3.1 million in open interest.
Kalshi's explanation
Diana attributed the trading patterns to Kalshi's liquidity incentive program, which rewards participants for providing liquidity. "We send our data every day to them [the CFTC], and it's not that weird for them to sort of review our data on the regular," she said.
When asked about protections against wash trading and self-trading, Diana said Kalshi has "tons of tools" and a "full surveillance team in place." Wash trading involves transactions designed to create the appearance of market activity without a genuine change in economic exposure.
Market attention
The scrutiny reflects broader attention to how prediction market platforms report trading volume and police activity between participants. Liquidity incentive programs typically reward market participants for providing orders to help create markets where other customers can buy or sell.
