Record $71B Volume Overshadowed by Wash-Trading Scrutiny — Kalshi Ends Liquidity Incentive Program
Kalshi and Polymarket posted a record combined $71 billion in trading volume in September 2026, but the milestone was overshadowed by scrutiny of whether some of that volume is genuine. The Wall Street Journal reported the CFTC is examining repeated near-identical trades of roughly $5,500 on Kalshi that generated more than $5 billion in Ethereum perpetual futures volume over a month — over a third of Kalshi's ETH volume. Questions were also raised about suspiciously high volume on low-probability World Cup contracts at Polymarket's international venue. Kalshi denied wash trading, attributing the pattern to market makers, and filed on September 30 to end its liquidity incentive program.
Kalshi and Polymarket collectively recorded a record $71 billion in trading volume in September 2026, the highest monthly combined total in the sector's history, as volume surged ahead of the November midterm elections and through the NFL season. But the record was immediately shadowed by questions about how much of the volume reflects genuine trading. The Wall Street Journal reported on September 30 that the CFTC is examining trades on Kalshi after allegations that repeated near-identical trades of roughly $5,500 inflated the platform's Ethereum perpetual futures volume. According to the report, trades executed at the $5,500 size generated more than $5 billion in Ethereum perpetual volume over the past month, and more than one-third of Kalshi's Ethereum trading volume consisted of rapid trades clustered around that same order size. The pattern — large volumes of identical-size trades executed in rapid succession — is the signature that surveillance systems flag as potential wash trading, where a trader buys and sells with themselves (or coordinated counterparties) to create the appearance of activity without taking genuine market risk.
Kalshi rejected the wash-trading characterization. The company said wash trading does not occur on its platform and attributed the repeated prints to market makers posting fixed quotes that faster traders then hit — a legitimate market-making dynamic in which a liquidity provider leaves standing orders at a set price and size, and those orders are repeatedly filled by other participants. Kalshi also stated that it is not under investigation over the matter, drawing a distinction between the CFTC examining trading patterns (a routine market-surveillance function) and the CFTC opening a formal investigation into Kalshi itself. On September 30, Kalshi filed to end its liquidity incentive program — the arrangement under which it paid or rewarded market makers for providing liquidity. Ending the program removes the financial incentive that critics argued could motivate artificial volume generation, and it is the clearest signal that Kalshi is responding to the scrutiny even while denying wrongdoing.
The volume questions extend to Polymarket as well, through a different pattern. Observers flagged unusually high trading volume on low-probability contracts at Polymarket's international venue. For the 2026 FIFA World Cup, $152 million was traded on contracts related to Spain's odds to win the tournament — but $158 million was traded on Egypt's odds, despite Egypt's probability never crossing 0.5%, and a comparable amount was traded on Morocco's odds, which never exceeded 2%. Genuine trading interest in a contract typically scales with the realistic probability of the outcome; a near-zero-probability contract attracting more volume than a favorite's contract is the kind of anomaly that suggests the volume may not reflect genuine directional betting. Low-odds contracts are also where wash trading is cheapest to execute, because the contract trades at a low price and large notional volume can be generated with relatively little capital at risk.
The scrutiny matters because trading volume is the headline metric underpinning both platforms' valuations. Kalshi is closing a funding round at a $40 billion valuation; Polymarket raised at $15-20 billion. Those valuations are justified in part by reference to the explosive volume growth — from under $10 billion combined monthly in late 2025 to $71 billion in September 2026. If a material portion of that volume is inflated by wash trading or incentivized market-making activity rather than genuine user demand, the growth narrative that supports the valuations is weaker than the headline numbers suggest. The CFTC's examination of the Ethereum perpetual volume is significant precisely because perpetual futures are Kalshi's newest institutional product, launched to compete with crypto exchanges — and if the volume in that product is substantially inflated, it undermines the institutional-adoption story that justifies the perps expansion. For a sector heading toward public markets, the integrity of its volume reporting is becoming a first-order question, not a technical footnote.
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