Kalshi denies a CFTC probe; its ether perpetual traded $539 million a day on $3.1 million of open positions

Prediction market Kalshi said on Wednesday it has not been contacted by the Commodity Futures Trading Commission and does not believe it is under formal examination, after The Wall Street Journal reported that the regulator was looking at a $5 billion run of nearly identical trades on its platform before deciding whether to open an enforcement case.

"We have not been contacted by the CFTC and don't believe there is any formal examination," Kalshi spokesperson Elisabeth Diana said, according to CoinDesk. She said the patterns "are typical of liquidity incentive programs and common in financial markets." According to CoinDesk, the CFTC had not responded to a request for comment, and the Journal reported that the agency declined to say whether an investigation was under way.

What the data shows

The questions center on Kalshi's bitcoin and ether perpetual futures, the crypto-style contracts that never expire. According to CoinDesk, most volume in both markets came from identically sized trades: ether perp trades clustered around $5,500, and bitcoin perp trades around $2,500 or $5,000. The Journal counted nearly one million similar-sized trades in one ether market.

Beni, a co-founder of research firm Stealth Neolab, used Kalshi's public API to find about $539 million of 24-hour volume in the ether perpetual against $3.1 million of open interest, CoinDesk reported. He also found that trades of exactly $5,500 made up 48% to 58% of notional volume on four days in September.

The number behind the number: 174 times

Divide those two figures and the ether perpetual turned over its entire open interest about 174 times in a day. Open interest is the value of positions still held at the end of trading. When volume is that large relative to it, almost all of the trading is positions being opened and closed again, often between the same kinds of participants, rather than new exposure being built.

For scale, Coinbase's ETH-USD spot market traded about 130,000 ether over the 24 hours to Wednesday evening, roughly $350 million at the day's prices, according to Coinbase's public market data. The two figures cover different days, so this is a rough comparison, not a like-for-like one. It still shows how large the reported Kalshi figure is for a new contract.

Kalshi's explanation does not require anything improper. Liquidity incentive programs pay participants to keep quotes on the book, and those payments can reward volume on their own. The trading that results is real, but it does not show real demand.

Who this matters to

Traders sizing positions on Kalshi's perps get little from the headline volume figure as a guide to how much can trade without moving the price. The $3.1 million of open interest says more about how much money is actually committed. Anyone comparing prediction markets and crypto venues by reported volume faces the same problem: incentive-driven volume makes those rankings hard to rely on.

The dispute lands as Kalshi and others push into bigger products. Kalshi is among the firms that have filed to offer perpetual futures on U.S. stocks, and CFTC staff recently said "mention" contracts are presumed open to manipulation. Asked about wash trading, Diana told CoinDesk Kalshi has "tons of tools" and "a full surveillance team in place."

Sources: CoinDesk; The Wall Street Journal; Coinbase Exchange market data. The turnover ratio is a Chronicle calculation from reported figures. This is market information, not investment advice.