Kalshi applies to terminate trading volume rewards, as doubts about washing transactions intensify

Kalshi announced that it will close its Volume Incentive Program, and the CFTC is reviewing billions of dollars in suspicious transactions.

Kalshi has notified the U.S. Commodity Futures Trading Commission (CFTC) that its Volume Incentive Program will close no earlier than October 13. At the same time, the CFTC is reviewing more than $5 billion in almost identical Ethereum perpetual contract transactions on the exchange.

What is Kalshi shutting down?

Kalshi said in a September 28 filing with the CFTC that it plans to close its "volume incentive program" on or after October 13. The program pays rewards to eligible traders from a fixed reward pool based on the share of trading volume qualified traders have in a given market.

Kalshi first registered the incentive plan with the CFTC in February 2023 and began operations in March of the same year. The platform said the plan aims to increase trading activity and liquidity on its central limit order book.

Kalshi's submission to the CFTC did not explain the reason for closing the plan.

Under this incentive plan, incentives are only applicable to transactions with prices between $0.03 and $0.97 and are not applicable to perpetual futures. The reward period is only 31 days and the payouts per participant per event contract are capped at half a cent.

Stopping the program does not mean that all incentives on Kalshi's archives will be cleared. The CFTC database separately lists the "Deposit and Trading Reward Incentive Plan" Kalshi filed on September 25 and is currently under review for a 10-day period.

Why do people think transactions on Kalshi are fake?

A CoinDesk analysis of Kalshi's public trading records released on September 22 found that a small number of recurring transaction sizes drove more than half the value of its Bitcoin and Ethereum perpetual markets.

On the Ethereum side, of the $13.5 million transactions sampled by CoinDesk between September 17 and September 20, transactions with prices in the $2 range around $5,499 accounted for $7.7 million, or 57%. Bitcoin also showed a similar pattern, with recurring $2,500 and $5,000 transactions accounting for 54% of sampled activity.

CoinDesk points out that these transactions may be caused by robots constantly placing orders of the same size. This pattern appears in 43 of 46 hourly samples taken since June 19.

An analyst under the pseudonym Beni (co-founder of research firm Stealth Neolab) was the first to point out this model, pointing out that the 24-hour trading volume of Ethereum perpetual contracts is approximately US$539 million, while the value of open interest is only approximately US$3.1 million.

The CFTC is reportedly subsequently investigating the transactions, involving more than US$5 billion in Ethereum perpetual contract transactions related to duplicate size over approximately a month.

Kalshi completely refuted the charge of "wash trading" in a blog post on September 22, when the company wrote: "There is no wash trading on Kalshi."

The company said that systematic automatic matching has been mechanically blocked, and coordinated knock-on transactions have been banned and monitored. It explained that the recurring patterns were due to its market maker arrangements. Firms receive a fixed fee to keep pending orders on the order book, while faster traders click on these quotes repeatedly.

Company spokesperson Elisabeth Diana said on September 23 that as of then, the CFTC had not contacted Kalshi. She also said the company believed that no formal review had been opened, adding that such patterns were normal in projects that paid for liquidity.

It is worth noting that a Colombia University study last year estimated that nearly 25% of Polymarket's trading volume in the past three years was knock-on transactions. However, Polymarket was not charged with conspiracy in that incident.

Will Kalshi be valued at US$40 billion?

Despite facing charges, September was the largest year on record in Kalshi. The Block's data dashboard showed that as of September 29, trading volume reached $52.98 billion, a record high. Although September is not yet over, this figure has exceeded the $38.67 billion recorded in August.

In July, the total transaction volume of Kalshi, Polymarket and Polymarket U.S. reached US$50.6 billion, of which Kalshi contributed approximately US$37.7 billion.

Kalshi 目前正就融资约 10 亿美元、估值接近 400 亿美元进行深入谈判，红杉资本（Sequoia Capital）和惠灵顿管理公司（Wellington Management）正在考虑领投，老虎全球（Tiger Global）和 Dragoneer 等机构也在潜在参与者名单中。

如果达成此交易，Kalshi 的估值将是其在 2026 年 5 月一轮融资后 220 亿美元估值的两倍左右。与此同时，Cathie Wood 的 Ark Invest 表示，其 ARKK、ARKW 和 ARKF 基金现在均持有 Kalshi 的相关敞口。