Kalshi Terminates Trader Incentive Program Amid CFTC Ethereum Futures Probe

Key Takeaways

• The prediction market platform submitted documentation to the CFTC announcing the termination of its Volume Incentive Program, effective no sooner than October 13.
• Platform activity surged to $52.98 billion by September 29, establishing a new record for monthly trading.
• The CFTC is reportedly examining over $5 billion worth of recurring Ether perpetual futures transactions.
• The company has rejected allegations of manipulative trading, attributing the activity to legitimate market-making operations and high-frequency traders.
• The platform is pursuing a substantial funding round that could raise $1 billion and establish a $40 billion company valuation.

The prediction market platform has notified the Commodity Futures Trading Commission of its decision to discontinue its Volume Incentive Program. According to the filing, the termination will take effect no earlier than October 13.

Launched in March 2023, the initiative distributed rewards to participants proportional to their trading activity on the platform’s order book.

The regulatory submission provided no explicit rationale for discontinuing the initiative. Additionally, the company made no connection between this decision and the recent scrutiny surrounding its trading metrics.

Platform achieves unprecedented trading activity

September witnessed the platform’s trading activity climb to $52.98 billion through September 29. This figure exceeded August’s complete monthly total of $38.67 billion.

Despite being preliminary data with the month not yet concluded, the September numbers represented the highest trading volume in the platform’s history.

July saw approximately $37.7 billion in platform activity. When aggregated with Polymarket and Polymarket US during that period, the combined trading reached $50.6 billion.

Regulatory attention on Ethereum futures contracts

Prior to the regulatory filing, a market participant operating under the username Beni highlighted unusual patterns on social platforms. The trader identified approximately $539 million in daily trading volume for the platform’s Ether perpetual futures product.

This activity contrasted sharply with merely $3.1 million in outstanding positions for the identical contract. The disparity prompted questions regarding the authenticity of the trading patterns.

The Wall Street Journal subsequently disclosed that the CFTC had begun examining the situation. According to their reporting, numerous transactions clustered around $5,500 in size and totaled more than $5 billion across approximately one month.

The publication characterized this as an examination rather than a formal enforcement proceeding. The platform has stated it received no communication from the CFTC regarding this matter.

In a public statement issued last week, the company addressed the allegations. The platform asserted that self-matching wash trading does not occur on its infrastructure.

According to the company’s explanation, the recurring transaction sizes resulted from market makers maintaining consistent price quotes. High-frequency traders then executed against those quotes, producing the observed pattern of uniform trade sizes.

The platform emphasized that its technology prevents traders from executing against their own orders. It noted that coordinated manipulative trading violates platform policies and is subject to active surveillance.

The company distinguished between the discontinued Volume Incentive Program and its ongoing perpetual futures market maker initiatives. According to their statement, these programs compensate participants for maintaining quoted prices, not for executed transaction volume.

Consequently, terminating the Volume Incentive Program does not affect the platform’s perpetual futures incentive structures. The CFTC documentation specifically references only the Volume Incentive Program.

Additional regulatory filings reveal the platform submitted a new Deposit and Trading Reward Incentive Program on September 25. This proposal remains under the CFTC’s standard 10-day review process.

Cryptocurrency expansion and capital raising efforts

Throughout September, the platform broadened its digital asset product suite. New perpetual futures contracts were introduced for BNB, Cardano, Worldcoin, Aave, and Venice Token.

This expansion increased the platform’s cryptocurrency perpetual offerings to Bitcoin alongside 17 additional digital assets. The product launches followed strong initial performance, with crypto perpetual futures volume exceeding $5.5 billion within the first two weeks of availability.

On September 29, Reuters disclosed that the platform is negotiating to secure approximately $1 billion in new financing. The reporting indicated this transaction would establish a company valuation approaching $40 billion.

Sequoia Capital and Wellington Management were identified as prospective lead investors. Tiger Global and Dragoneer were also mentioned as potential participants in the funding round.

If finalized, this would represent a substantial increase from the platform’s previous $22 billion valuation achieved during a May 2026 fundraising. Reuters cautioned that deal terms remain subject to modification before completion.

Ark Invest recently revealed new exposure to the platform. The investment firm confirmed that its ARKK, ARKW, and ARKF funds have established positions connected to the company.

Ark has projected that prediction markets may ultimately generate between $1 trillion and $5 trillion in annual trading volume.

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