Repeated trades at near-identical dollar amounts can be a reason to examine market activity, but the pattern alone does not establish that a trader was creating artificial volume. That distinction is central to the scrutiny facing Kalshi: a working paper’s analysis of publicly reported trades flagged an unusual concentration, while the available account does not identify the traders or prove that the trades were wash trading.
A conspicuous pattern, with an unknown author
The paper, posted online Sept. 21, examined 4.1 million Kalshi trades worth about $11.5 billion from Sept. 5 through Sept. 18. Three trade-size clusters represented roughly $5.87 billion, or 51%, of the total, according to the New York Post’s account of the analysis. In bitcoin, trades of about $5,000 and $2,500 made up 57% of volume; similar fixed-dollar patterns appeared in 17 of the 20 perpetual contracts reviewed, CoinGeek reported.
The paper also describes a near-simultaneous change in dominant trade sizes in Kalshi’s bitcoin and ether markets on Aug. 24. The shift occurred within about 10 seconds: bitcoin’s common sizes moved from roughly $4,000 and $2,100 to $5,000 and $2,500, while ether’s moved from about $4,500 to $5,500. The author said the synchronized change was consistent with one operator adjusting parameters across markets. Publicly available data, as described in the reporting, does not establish who made the trades or changed those parameters.
The regulatory question is still unsettled
Wash trading generally describes transactions arranged to give a misleading impression of market activity. A former quantitative trader, Benoit Dubosson, known as “Beni,” raised that concern about Kalshi’s perpetual-futures markets, according to CoinGeek. Kalshi says it found no evidence of wash trading and that the trades were genuine, attributing the pattern to incentives intended to bring liquidity to new markets. The company’s published rules prohibit fraudulent, abusive, manipulative or deceptive trading, but the existence of that prohibition does not show that the trades at issue breached it, according to Kalshi’s Market Integrity Hub.
Reports also differ on the status of federal scrutiny. The New York Post, citing the Wall Street Journal, reported that the Commodity Futures Trading Commission had examined the trades before deciding whether to open a formal enforcement investigation. CoinGeek reported that a CFTC spokesperson declined to comment on whether an investigation was underway, while Kalshi spokesperson Elisabeth Diana said the company had not been contacted and did not believe there was a formal examination. Those accounts do not resolve whether the agency is reviewing the activity.
The regulatory framework provides context, not a verdict. Under 17 CFR Part 38, designated contract markets must maintain automated systems to detect and investigate potential trade-practice violations. That general requirement does not establish that a particular trading pattern is unlawful or that the CFTC has opened an investigation into Kalshi.
What past enforcement cases show—and what they do not
The CFTC has brought wash-trading cases in other markets, but those outcomes cannot determine what happened in Kalshi’s crypto contracts. On March 19, 2021, the agency settled charges against San Francisco-based Coinbase involving false or inaccurate reporting and wash trading by a former employee on its GDAX platform. The case involved Coinbase’s GDAX platform, according to the CFTC’s order announcement.
In a separate case settled in September 2022, the CFTC charged Beijing-based COFCO and Chinatex over affiliated-account trades in ICE cotton futures. The agency said the trades transferred a position between affiliated accounts while minimizing risk and price competition. The case involved affiliated-account trades in ICE cotton futures, the CFTC said.
For Kalshi, the unresolved issue is whether the concentrated sizes and synchronized shift reflect the company’s stated liquidity incentives or activity that violated market rules. The reported trade data has drawn attention; it has not, by itself, answered that question.
