CFTC Reviews $5 Billion in Repeated Ether Trades on Kalshi
The U.S. Commodity Futures Trading Commission (CFTC) is reviewing a large volume of nearly identical Ether perpetual futures trades on Kalshi after almost 1 million transactions generated more than $5 billion in trading volume over the past month, The Wall Street Journal reported.
The regulatory review centers on a recurring pattern in Kalshi’s Ether market, where more than one-third of recent trades in one market were clustered around approximately $5,500.
The CFTC is examining the activity before determining whether to open a formal investigation, according to the report. The regulator has not announced a finding of misconduct and declined to comment on the matter.
The unusual trading pattern has prompted allegations of wash trading, a practice involving transactions that lack genuine economic purpose and can create a misleading appearance of market activity. Kalshi has rejected those allegations and said the repeated trade sizes have another explanation.
Kalshi Attributes Ether Trade Pattern to Market-Making Activity
Kalshi said hundreds of separate traders participated in the transactions, arguing that the repeated trade values resulted from faster traders repeatedly executing against fixed-size orders posted by market makers.
The company said its trading systems prevent customers from matching their own orders and that it prohibits coordinated wash trading. Kalshi also said it monitors trading activity for potential violations of those rules.
According to Kalshi, its liquidity programs compensate market makers for maintaining orders at specified sizes and spreads. Those arrangements can result in repeated transactions of similar value when other traders quickly execute against the available liquidity.
Kalshi also operates a temporary fee-refund program for qualifying members that clear their own trades. The company said the rebates cannot exceed the fees paid by those participants.
The Wall Street Journal identified Jump Trading and Wintermute among firms involved in the trading activity. Jump has said it trades independently for profit and has controls designed to prevent self-matching.
The recurring trade sizes have nevertheless raised questions about how much of the reported Ether market volume represents activity from a broad range of participants versus repeated execution of predetermined order sizes.
CFTC Review Comes Amid Broader Kalshi Regulatory Disputes
The CFTC review adds another regulatory issue for Kalshi after a separate dispute involving the platform’s event contracts in August.
On Aug. 11, the CFTC used emergency authority to direct Kalshi to continue operating under federal market rules. That action followed a legal dispute with New York over the company’s event contracts.
New York Attorney General Letitia James sued Kalshi in July, seeking to prevent the company from offering its event contracts in the state and seeking more than $36 billion.
CFTC Chair Michael Selig argued that federal law governs interstate derivatives markets. The dispute over Kalshi’s event contracts is separate from the current regulatory review of trading activity in its Ether market.
The latest CFTC review has not resulted in a public determination that the trades violated market rules. The regulator is assessing the trading pattern before deciding whether further action is warranted.
Writer: Marcus RenfieldCrypto Market Analyst & Onchain WriterMarcus Renfield covers cryptocurrency markets with a focus on onchain data, Bitcoin price action, and emerging market narratives. His writing examines how capital flows, network activity, and broader market structure influence short- and medium-term trends.He aims to provide clear, data-informed analysis for readers seeking a deeper understanding of crypto market dynamics.