Kalshi’s ether perpetual futures market faces wash trading allegations

Kalshi is facing wash trading allegations after an analysis found that most sampled ether perpetual futures volume came from trades clustered around a repeating dollar value.

The Defiant analyzed 120,000 consecutive KXETHPERP trades covering roughly 18 and a half hours from September 20 to September 21. About 47.2% fell within a narrow band around one dollar value and accounted for $307.6 million of the $490.3 million in notional volume, or 62.75%.

The pattern appeared throughout the sample. Trades initially clustered just below $5,500 before shifting to about $5,425.55 after 03:00 UTC on September 21. The median interval between clustered trades was 0.365 seconds, with activity holding near 96 trades per minute for more than two hours.

The size also appeared fixed in dollar terms rather than ETH quantity. Ether moved more than 5% during the period, while the amount of ETH per clustered trade adjusted inversely to keep the dollar value relatively stable.

Similar patterns appeared in other Kalshi perpetual markets. About 29% of sampled bitcoin perp trades clustered near $2,500, while 24.6% of NEAR trades clustered near $500. Ether showed the highest concentration.

The findings follow allegations from quantitative analyst Beni that Kalshi may be inflating crypto volume through repeated transactions and trading incentives.

The public data does not prove wash trading occurred. Kalshi’s API does not identify participants on either side of a trade, making it impossible to determine whether the same entity controlled both sides.

KXETHPERP also showed unusually high turnover. At one point on September 21, the market recorded $612.5 million in 24 hour notional volume against $9.7 million in open interest, a ratio of about 63 times.

Kalshi’s published perpetual futures fee schedule includes maker and taker fees but no maker rebate matching one cited in Beni’s allegations. The exchange does operate separate liquidity incentive programs, while some arrangements involving designated market makers remain confidential.

Kalshi also operates Kalshi Trading LLC, an affiliated entity created to provide liquidity. Nothing in the public data links the affiliate to the trades identified in the analysis.

Kalshi’s crypto chief has defended the exchange’s use of incentives, arguing that such programs are common across trading venues. His response addressed crypto prediction markets, however, while the allegations concern Kalshi’s separate perpetual futures business.

Kalshi did not respond to The Defiant’s request for comment.