Suspicious Kalshi Bot Stops Trading Amid Wash Trading Allegations

A bot stops trading after wash trading suspicions

A trading bot that had been making suspiciously uniform trades on a prediction market tied to Zohran Mamdani on Kalshi has stopped its activity. The halt came after analysts raised concerns that the platform's perpetual contract volume was being artificially inflated through wash trading.

Kalshi is a prediction market platform where users can trade on the outcomes of real-world events. Perpetual contracts, or "perps," are a type of derivative that lets traders speculate on price movements without an expiration date.

Key numbers behind the allegations

• Pseudonymous quant analyst "Beni" claimed Kalshi's 24-hour ether perpetual contract volume was $539 million, while open interest sat at just $3.1 million.
• A series of $5,500 trades reportedly accounted for 58% of Kalshi's ETH perp volume over a four-day period.
• A separate bot traded the Mamdani "2028 Democratic Presidential Nominee" market, buying shares at two tenths of a cent and selling at one tenth every four seconds for nearly two months.

What the analysts found

Prediction market analyst TickerTracker described the bot's trading pattern as resembling a metronome, with repeated back-and-forth trades occurring every few seconds. Analyst Daniel Sapkota visualized the activity, noting that between August 1 and September 19, someone appeared to be buying and selling $1 worth of the Mamdani contract every two seconds, totaling roughly $2 million in notional volume.

Prediction market tool firm Resolve claimed it made approximately $30 per day by counter-trading the bot.

Kalshi's response and IcoBeast's apology

Kalshi's crypto lead, known as IcoBeast.eth, initially pushed back aggressively against Beni's wash trading claims. However, the tone shifted significantly. IcoBeast posted a public apology, stating:

"I thought more about it. Beni, sorry for being a dick. I shouldn't have attacked you personally. It was cocky and unnecessary, and I should have stuck to the facts."

IcoBeast also clarified that Kalshi's incentive programs pay for liquidity, not wash trading, and the platform has since published an article attempting to debunk the wash trading claims.

What is confirmed

• The bot stopped trading after the wash trading allegations gained attention.
• Beni's specific figures regarding Kalshi's ETH perp volume and open interest were publicly stated.
• IcoBeast.eth issued a public apology and shifted Kalshi's official stance on the allegations.
• TickerTracker and Daniel Sapkota independently documented the bot's unusual trading patterns.

What is still unclear

Some users have suggested the bot's trades could have been a technical bug, while others speculated it may have been someone farming volume to reach a higher rate limit tier on the platform. TickerTracker noted that notional volume within prediction markets can often appear inflated, and automated trading is not necessarily unusual. Whether the trades broke Kalshi's rules or represent a simpler explanation remains unsettled.

Why it matters

The allegations raise questions about the integrity of trading volume on prediction market platforms. If volume figures are inflated through automated or non-genuine trading activity, it could affect how users and regulators assess the health and legitimacy of these markets.

Sources

• Protos

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