Kalshi denies wash trading allegations in its perpetual markets, attributing high volume to incentivized market makers and independent traders.
DeFi & Yields ·
Kalshi addressed accusations of wash trading in its perpetual markets this weekend, stating that claims of inflated volume were misleading. The exchange explained that the trades in question were genuine transactions where both counterparties actively wanted to participate, disagreeing on fair price rather than colluding to artificially boost activity. One side of these trades—hundreds of independent traders taking liquidity—consistently profited, while the other side, comprising incentivized market makers, regularly lost, a pattern inconsistent with wash trading.
Kalshi operates market maker programs offering flat fees for maintaining resting liquidity across perpetual markets, a structure the exchange noted mirrors practices at regulated venues including CME, CBOE, and Nasdaq. These programs reward liquidity provision rather than volume generation, and market makers remain obligated to stay active in markets even when entering unprofitable positions. Faster traders exploit this dynamic by repeatedly trading profitably against them, creating genuine economic activity rather than circular trading designed to deceive.
What remains unclear is whether the broader criticism examined Kalshi's prediction markets platform or only its perpetuals offering, and how the exchange's volume reporting methodology compares to industry standards for counting trading activity.