The Commodity Futures Trading Commission is examining a wave of unusual crypto trades on prediction market Kalshi before deciding whether to launch a formal enforcement investigation, the Wall Street Journal reported, citing a person familiar with the matter.
The trades in question involve more than $5 billion worth of ether transactions clustered around the $5,500 mark over the past month. Regulators and outside researchers are asking whether the pattern amounts to “wash trading” — a practice where a single trader buys and sells the same asset simultaneously to fake market activity and volume.
Kalshi denies it. The company told the Journal the trades were genuine and reflected deliberate incentives built to provide liquidity in its new perpetual-futures markets. Kalshi also says wash trading is explicitly banned under its own rules.
Company spokesperson Elisabeth Diana pushed back directly on the CFTC report when asked by The Post.
“We have not been contacted by the CFTC and don’t believe there is any formal examination. As we’ve said, these data patterns are typical of liquidity incentive programs and common in financial markets. Don’t believe everything you read on X, a lot of the discourse was rumors seeded by competitors.”
The controversy was ignited by a working paper posted online September 21 by an author going by “OctopusTakopi.” The paper analyzed 4.1 million publicly reported Kalshi trades worth about $11.5 billion between September 5 and September 18, benchmarking them against hundreds of millions of trades on Binance, Bybit and Hyperliquid.
What the numbers show
The analysis found roughly half of Kalshi’s perpetual futures volume in that window was packed into a small handful of repetitive, fixed-dollar trade sizes. In Kalshi’s bitcoin market, trades of about $5,000 and $2,500 made up 57% of volume. Combined with the ether cluster, the three patterns together account for $5.87 billion — 51% of the $11.5 billion in perpetual futures volume the researchers reviewed.
The same fixed-dollar pattern showed up in 17 of the 20 Kalshi perpetual contracts trading during the period, and the researchers say it traces back to shortly after Kalshi launched these contracts in June.
One data point stands out. On August 24, the dominant trade sizes in both Kalshi’s bitcoin and ether markets changed almost in lockstep. Bitcoin’s typical trade sizes shifted from roughly $4,000 and $2,100 to $5,000 and $2,500. Ether’s shifted from about $4,500 to $5,500. Timestamps show both changes happened within roughly 10 seconds of each other.
The paper’s author says that kind of synchronized switch is consistent with a single operator adjusting trading parameters across both markets at once — though the author is careful to note the public data doesn’t reveal who is actually behind the trades, so no individual or entity can be identified as responsible.
For now, the CFTC’s review is a preliminary look, not a confirmed investigation, and Kalshi maintains the activity is nothing more than an ordinary liquidity program operating in a young market. Whether regulators see it the same way remains to be determined.
