Kalshi is under scrutiny after an X user accused the regulated U.S. prediction market of generating artificial trading activity in its ether perpetual futures.
The criticism focuses on the unusually large gap between trading volume and open interest on Kalshi’s newly introduced crypto perpetual contracts. IcoBeast.eth, a Kalshi product executive, disputed the claims and said they were based partly on a misunderstanding of how the platform operates.
CoinDesk sought comment from Kalshi but had not received a response at the time of publication.
Questions Over Trading Activity
The allegations were raised by Beni, a quantitative analyst and co-founder of Stealth Neolab. He pointed to Kalshi’s ETH-PERP contract, which he said recorded $539 million in 24-hour volume while open interest was only $3.1 million.
That puts the reported trading volume at about 174 times the outstanding open interest.
Beni argued that such a discrepancy can be a warning sign of wash trading, where repeated transactions increase reported volume without producing a similar increase in actual market exposure.
Open interest represents the value of contracts that remain active, while trading volume measures the value of contracts traded during a specified period.
Beni also highlighted repeated trades worth exactly $5,500. He claimed that this pattern accounted for as much as 58% of Kalshi’s total ether perpetual volume on four separate days and characterized it as evidence of possible manipulation.
He additionally cited a rebate schedule filed with the Commodity Futures Trading Commission. The filing, according to Beni, allows certain Self-Clearing Members to potentially reach a net-zero fee through a 0.3-basis-point maker rebate combined with a 0.3-basis-point taker fee.
The argument is that when trading costs can effectively be eliminated, participants may have greater incentives to generate additional volume.
Trading rebates are commonly used to encourage market makers to supply liquidity and can include fee refunds or other financial incentives tied to trading activity.
Kalshi Pushes Back
IcoBeast.eth initially argued that Kalshi’s fee structure would itself discourage wash trading. As the discussion spread across X, he provided additional details addressing the accusations.
One of his first points concerned an Artemis chart referenced in Beni’s post. IcoBeast.eth said the chart measured prediction-market share rather than the trading volume generated by perpetual contracts, making it unsuitable for the comparison being made.
He also explained the methodology behind Kalshi’s headline volume figures.
According to IcoBeast.eth, Kalshi follows the same convention used by Polymarket, where event-contract volume reflects the maximum possible payout rather than the amount of money initially paid to purchase the contracts.
For instance, buying 100,000 contracts at 30 cents each requires $30,000 upfront. But because each contract can ultimately pay $1, the reported volume is $100,000. The difference between those figures can make reported volume appear much larger than the cash committed.
Kalshi argues that this accounting convention measures actual demand for contracts rather than indicating fabricated trading activity.
IcoBeast.eth also rejected the claim that Kalshi handpicks a limited group of Self-Clearing Members for its perpetual markets.
He said CFTC-regulated exchanges are subject to fair-access requirements, allowing firms that satisfy the relevant capital, operational and regulatory standards to become Self-Clearing Members.
“Anyone can become a Self-Clearing Member of a CFTC regulated exchange as long as they meet the regulatory requirements,” he said.
He further stated that Kalshi does not pay rebates on its crypto event prediction contracts.
Rebate structures are common at major trading venues such as CME Group, Hyperliquid and Binance, but IcoBeast.eth said Kalshi’s status as a regulated Designated Contract Market means its incentive programs must be publicly filed with the CFTC.
That requirement, he argued, provides greater transparency into the incentives offered by the exchange.
Early Stage for U.S. Perpetuals
IcoBeast.eth acknowledged that Kalshi’s U.S. perpetual futures business is still relatively new. He said the company is entering an emerging market while operating under regulatory requirements that require its incentive programs to be disclosed publicly.
He contrasted that framework with offshore perpetual exchanges, where, according to his comments, similar arrangements may not be subject to the same public filing requirements.
The disagreement ultimately comes down to how Kalshi’s trading data should be interpreted. Beni has pointed to the $539 million volume, $3.1 million open interest and recurring $5,500 trades as reasons for scrutiny. Kalshi, meanwhile, says its reporting methodology and regulated market structure explain the unusual-looking figures and provide transparency into its operations.
