Kalshi filed to end a program that pays participants based on trading volume, days after defending unusual activity in its ether perpetual futures market against allegations of wash trading.
In a Sept. 28 notice to the Commodity Futures Trading Commission (CFTC), Kalshi said the termination will take effect no earlier than Oct. 13. The filing moves the program’s scheduled end date up from Oct. 1, 2027. The company said it will retain records of trades and payments made through the program through its termination.
Kalshi’s Volume Incentive Program allocates a fixed reward for an eligible market among participating traders according to their share of qualifying volume. Kalshi said it designed the rewards to increase activity and liquidity on its order book and improve pricing.
Kalshi did not respond to a request for comment.
The filing follows a week of scrutiny over trading in Kalshi’s ether perpetual futures market. Social media posts alleged that a series of nearly identical trades reflected wash trading, or artificial activity with no economic volume, and inflated the exchange’s reported volume.
The alleged inflated volume comes as Kalshi continues to reach record volumes as it also raises money on increasing valuations. It closed a funding round in May valuing the company at $22bn. Recent reports suggest the company is in “advanced talks” in a round that would value it at $40bn.
The allegations also come as Kalshi faces a likely Supreme Court date in its legal fight against state regluators and increased Congressional scrutiny.
Kalshi volume draws allegations
Social media account Beni detailed allegations against the company in a Sept. 19 thread. Beni pointed to more than $538.6m in 24-hour volume traded against $3.1m in open interest as the “most egregious evidence.”
Last week, the Wall Street Journal reported that its analysis of public data found nearly a million transactions since August, with more than a third of recent trades clustered around $5,500 accounting for more than $5bn in ether perpetual futures volume over the previous month.
Kalshi denied the wash trading characterization in an explainer about its perpetual futures markets last week. It said a market maker repeatedly posted fixed-size orders that hundreds of other traders chose to trade against, with the takers consistently making money at the maker’s expense.
Kalshi said it has seen no evidence of wash trading in the activity and that it is “explicitly banned in our rulebook.”
Kalshi also said its perpetual futures liquidity programs typically pay market makers to maintain bids and offers of specified size and spread for a set amount of time. The company said those payments reward available liquidity rather than the number of trades executed against the orders.
The exchange separately described a temporary fee-rebate program for self-clearing perpetual futures members.
The WSJ reported the CFTC was examining the trading data before deciding whether to open an enforcement investigation. Kalshi subsequently said the agency had not contacted it and that it did not believe a formal examination was underway.
CFTC warned about incentives
Kalshi’s filing also follows an August CFTC staff advisory to exchanges about prediction market incentive programs. The advisory was industry-wide.
The agency’s market oversight staff warned that certain volume-based rewards, particularly steep tiers or bonuses triggered at trading thresholds, can encourage activity aimed at reaching a payout rather than making a genuine trade.
CFTC staff also warned that market-maker stipends and rebates designed to guarantee profits or cover losses can create their own risks. The advisory told exchanges to disclose program terms clearly and tailor surveillance to the behavior each incentive could encourage.
