Key highlights:
- Kalshi is terminating its Volume Incentive Program by October 13 (nearly a year early), amid scrutiny over $5B+ in crypto perpetual futures volume
- Kalshi disputed the wash trading allegations, saying a market maker’s resting orders were executed by hundreds of traders, and that its systems prevent coordinated trades
- Despite the controversy, Kalshi recorded $52.98B in volume through Sept. 29 with reported talks to raise 1B at a $40B valuation
Kalshi is ending a trading incentive program as questions grow around cryptocurrency perpetual futures volume that exceeded $5 billion, including allegations that some trading activity may have been artificially inflated.
The decision comes as the prediction market operator reports record trading activity and attracts fresh investor interest, while the claims around its crypto volume remain disputed.
In a September 28 filing with the U.S. Commodity Futures Trading Commission (CFTC), KalshiEX LLC notified the regulator that it would terminate its Volume Incentive Program effective no earlier than October 13, 2026.
The program was previously scheduled to run until October 1, 2027, meaning the revised date brings its planned end forward by almost a year.
Introduced in February 2023, the program was designed to encourage trading activity across Kalshi’s markets by distributing rewards to eligible participants based on their share of qualifying trading volume.
Under the program, participants received a portion of a fixed reward pool for each qualifying market, with payouts determined by their contribution to eligible trading volume during the relevant period.
Trades generally had to execute at prices between $0.03 and $0.97 to qualify, while rewards for event contracts were capped at $0.005 per contract traded for each participant.
The latest filing establishes when the program will end but does not say that the decision was prompted by the wash trading allegations surrounding Kalshi’s cryptocurrency perpetual futures.
The rewards program is also separate from Kalshi’s liquidity provider arrangements, which have become part of the discussion around how trading activity on its crypto markets is generated.
Repeated $5,500 trades raise questions about Kalshi’s ETH futures
Scrutiny of Kalshi emerged in September after traders examined the exchange’s public trade data and identified repeated transactions involving roughly $5,500 in Ethereum perpetual futures.
On Sept. 21, trader Beni, posting on X as “beniduboss”, published an analysis claiming that trades around that size accounted for 47% to 58% of ETH perpetual futures volume across several periods from Sept. 16 to Sept. 20.
One figure showed about $538.6 million in 24-hour ETH perpetual volume against $3.1 million in open interest, which measures outstanding positions rather than completed trades.
Another analysis by X user Phin examined trade records from Sept. 14 to Sept. 20 and identified 529,318 ETH perpetual trades worth about $2.217 billion. The analysis attributed roughly $1.23 billion, or 55.47%, to trades clustered around $5,500.
Both analyses relied on the same underlying trade records, meaning the findings did not independently establish coordinated trading.
Repeated trade sizes can occur when automated market makers use fixed-size orders, and the data alone does not determine whether transactions were part of wash trading or other prohibited activity.
The Wall Street Journal later reported that the CFTC was examining trading patterns involving nearly identical Ether perpetual transactions.
The reported activity generated more than $5 billion in volume over roughly a month, although the examination did not establish that wash trading occurred or confirm a formal enforcement investigation.
Kalshi rejects wash trading allegations as crypto volume surges and new $1B funding
Kalshi has rejected allegations that some of its cryptocurrency perpetual futures volume was artificially generated, saying the trades reflected genuine activity between participants taking opposite sides of the market.
The exchange said a market maker had posted resting orders that were subsequently executed by hundreds of traders, which it said explained the repeated $5,500 trade size seen in the market.
Kalshi also said its systems prevent traders from matching their own orders, while coordinated or prearranged trades are prohibited and monitored through its surveillance systems.
The explanation comes as scrutiny has expanded beyond Kalshi’s volume incentive program to the mechanisms used to generate liquidity on its perpetual futures markets.
Kalshi distinguishes its liquidity provider programs from volume-based rewards.
Under the liquidity arrangements, participants are compensated for maintaining buy and sell orders of specified sizes within defined price spreads and time periods.
The company says these programs reward liquidity supplied to the order book rather than the amount of trading volume generated when those orders are executed.
Kalshi’s separate temporary perpetual futures fee rebate program has also attracted scrutiny. Under its filed terms, eligible self-clearing members can receive rebates tied to trading fees, while self-matching, wash trading, and prearranged transactions are excluded.
Kalshi has said the structure is designed to prevent combined maker and taker fees from becoming negative on individual trades.
The scrutiny comes as Kalshi’s overall trading activity continues to accelerate and reports of fresh capital raise. Reuters reported Sept. 29 that Kalshi was in advanced talks to raise about $1 billion at a valuation of roughly $40 billion, although the terms remained subject to change.
Also, Kalshi has recorded $52.98 billion in volume through Sept. 29, already exceeding its previous monthly record of $38.67 billion set in August.
Investor interest has also increased, with ARK Invest gaining direct exposure to Kalshi through its ARKK, ARKW, and ARKF exchange-traded funds. ARK estimates prediction markets could eventually generate $1 trillion to $5 trillion in annual volume.
Source:: Kalshi Ends Rewards Program as $5B Volume Draws Wash Trading Scrutiny