Kalshi Files to End Volume Rewards Program as 5 Billion USD Ether Perp Scrutiny Intensifies

Kalshi Files to End Volume Rewards Program as 5 Billion USD Ether Perp Scrutiny Intensifies

Kalshi has filed with the Commodity Futures Trading Commission to terminate its Volume Incentive Program no earlier than October 13, a move that lands in the middle of mounting questions about billions of dollars in repeated Ether perpetual futures trades on the prediction market platform.

A September 28 CFTC filing states that KalshiEX intends to terminate the program, which rewards eligible traders based on their share of qualifying trading activity. Notably, the document gives no reason for ending the program and does not connect the decision to the recent allegations surrounding the exchange’s perpetual futures volume.

What the Volume Incentive Program did

Kalshi originally filed the program with the CFTC in February 2023, describing it as a way to increase trading volume and liquidity on its central limit order book while encouraging participation from members. Under the latest terms, eligible traders receive a portion of a fixed reward pool based on their share of qualifying completed volume in a market.

Trades generally needed to occur between 0.03 and 0.97 USD for event contracts to qualify, although the filing specifically notes that this price range does not apply to perpetual futures. Reward periods can run for no more than 31 days, event-contract rewards are capped at 0.005 USD per contract per participant, and Kalshi reserves the right to remove any trader whose activity the chief regulatory officer deems abusive or inconsistent with the program’s purpose.

Critics were quick to draw their own conclusions about the timing. Commentators on social media characterized the termination as an attempt to quietly wind down what they described as sponsored wash trading, though Kalshi has not acknowledged any link between the filing and the volume allegations.

The Ether perp questions

The scrutiny predates the termination filing. Reporting earlier in September detailed claims from a trader named Beni, who pointed to roughly 538.6 million USD in 24-hour Ether perpetual volume on the platform compared with approximately 3.1 million USD in open interest, a gap so wide it suggested the same capital was being recycled through repeated prints rather than representing genuine positioning.

More than 5 billion USD in similar Ether perpetual trades ultimately drew regulatory attention, according to reports. Kalshi denies wash trading and says the repeated prints came from market makers and faster traders operating legitimately within its market structure.

Ether traded near 2,694 USD on major spot exchanges as the filing circulated, according to Binance data, meaning the alleged trading volumes dwarfed typical real positioning on the contract.

A record month regardless

The controversy has not slowed the exchange’s headline numbers. Data cited by The Block put Kalshi’s September trading volume at 52.98 billion USD through September 29, already surpassing August’s 38.67 billion USD total. August itself followed a July in which Kalshi generated roughly 37.7 billion USD of the 50.6 billion USD recorded across Kalshi, Polymarket and Polymarket US combined.

Kalshi’s growth story extends beyond trading volumes. Reuters reports the exchange is discussing a raise of about 1 billion USD at a roughly 40 billion USD valuation, a striking figure for a platform that built its brand on election and event contracts.

Rewards are not disappearing entirely

Ending the older Volume Incentive Program does not mean Kalshi is abandoning trading incentives altogether. The CFTC database separately lists a Deposit and Trading Reward Incentive Program filed by Kalshi on September 25, which has been placed under a 10-day regulatory review.

That nuance matters for anyone reading the termination as a wholesale retreat from volume stimulation. The exchange appears to be swapping one incentive architecture for another, with the new program’s terms still under review by regulators.

What to watch

The termination takes effect at the earliest on October 13, which means the program could still operate during the first half of October. Whether the CFTC treats the Ether perpetual volume questions as a standalone enforcement matter, separate from the reward program filing, remains the key open question.

For the broader prediction market sector, the episode is a stress test of a young industry’s growing pains. Record volumes attract attention from traders, investors and regulators alike, and incentive programs that reward activity for activity’s sake become harder to defend when open interest and volume diverge by two orders of magnitude. Kalshi’s next moves on its new reward program and its reported funding round will show whether the platform can keep its momentum while convincing Washington its tape is clean.