Two threads set off the debate. On Sept. 20, a user on X highlighted that Kalshi's ether perpetual futures were printing many trades clustered near $5,500. CNBC's review determined that close to 50% of that day's notional was generated by orders in the $5,495-$5,505 range, and turnover looked unusually high relative to the posted liquidity on the order book.
Separately, Polymarket's international platform, which is not under U.S. oversight, has shown a persistent tilt in multi-contract markets: the lowest probability contracts often attract more trading than the favorites. Observers spotted the pattern across election, sports, and central bank markets.
Those anomalies led some to worry that reported activity might be exaggerated, or worse, reflect wash trading, where actors buy and sell to themselves to simulate demand. Both companies deny that. Each says the activity is organic and that there is no wash trading on their platforms.
"You'd expect DCMs to be surveilling unusual volume and looking into any signs of market disruption."
Kyle Gesuelli, who oversees revenue and analytics at Polymarket, said the appetite for long-shot contracts is not the result of manipulation. He attributed it to highly active traders, often called sharps, who find and trade mispricings using advanced tools and algorithms. "It's actually healthy for markets because it brings pricing imbalances back into balance," Gesuelli said.
Kalshi said last week it has no wash trading on the platform and added that hundreds of distinct users were identified as participating in the Sept. 20 activity first surfaced on social media. Experts interviewed by CNBC nonetheless pointed to the gap between daily volume and available liquidity on the ether contracts as troubling and indicative of an inefficient setup that can foster inorganic activity. According to spokesperson Jack Such, the company has "zero concerns" regarding that ratio.
According to The Wall Street Journal, the Commodity Futures Trading Commission is looking into transactions in Kalshi's ether perpetual. CNBC could not independently verify that, and a CFTC spokesperson said the agency will neither confirm nor deny issues tied to ongoing investigations. "We have a zero tolerance policy when it comes to any sort of manipulative trading, including wash trading, insider trading, or fraud in our markets," CFTC Chairman Michael Selig said on CNBC's "Squawk on the Street" last Wednesday. "When you have new types of markets evolving, you're going to see fraud with that."
Barron's reported in April that on Polymarket's international site, 2028 U.S. presidential markets showed unusually heavy action in unlikely outcomes. A contract on JD Vance as the Republican nominee drew less trading than one on Elon Musk, who is ineligible for the presidency, and similar skews appeared in contracts on potential Democratic nominees. That pattern did not show up on its rival Kalshi, where low-odds 2028 presidential contracts have less volume than higher-probability names.
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Sports saw the same quirk on Polymarket international. In the 2026 FIFA World Cup market, $152 million traded on eventual winner Spain. Egypt, whose probability never rose above 0.5%, drew $158 million, and Morocco, which never exceeded a 2% chance, logged slightly more than Spain.
The starkest case may be a Polymarket international contract on Ethiopia's next prime minister. Abiy Ahmed, who won and is priced at 98%, has about $170,000 in trading on his contract. Gedion Timothewos, whose odds have remained below 3% for months, has attracted almost $56 million. The contract remains open even though the election took place in June.
CNBC's analysis of Dune Analytics data shows volume for the Ethiopian market rose more than 6.7 times between June 21, when reports confirmed Ahmed's victory, and Sept. 25. The biggest single day was July 30, with over $15.3 million traded. A Polymarket spokesperson said the market will settle once the government chosen this summer is formally sworn in, which is slated for Oct. 5.
A CNBC analysis found the low-odds tilt did not appear in 2028 nominee markets on Polymarket's U.S. exchange, a venue overseen by the CFTC. Gesuelli said the international venue has a larger concentration of sharps using complex software and algorithms to profit from small mispricings, while the U.S. exchange skews more toward casual retail traders.
Questions about wash trading on Polymarket's international platform predate this summer. A Columbia University study initially published in November 2025 concluded that patterns viewed as indicative of wash trading made up 60% of weekly volume in December 2024, dropping to 20% by October 2025. Allen Sirolly, the lead author, reported that by April 2026 the metric had dropped to a negligible level.
Stronger surveillance and recently added fees, a Polymarket spokesperson said, have curtailed manipulation risks. Sirolly said the ongoing popularity of low-odds contracts is still concerning.
Within prediction-market circles, some point to speculation about a possible token airdrop as a driver of low-odds activity. Jay Maliava, co-founder and CEO of trading terminal Kairos, said crypto companies commonly use airdrops to reward early users and noted that Polymarket's international platform runs on the Polygon blockchain. He added that eligibility criteria can vary, potentially including open interest or user-level volumes. Polymarket said it had no comment on the airdrop speculation.
Benoît Dubosson was the first to call out unusual trading in Kalshi's ether product on Sept. 20; CNBC's review showed that almost 50% of that day's turnover clustered near $5,500. Andre Guettler, a finance professor at Ulm University in Germany, warned that if a meaningful portion of reported perpetuals activity is manufactured, headline growth could overstate true demand.
Both companies have tied rising volumes to big ambitions. After launching its U.S. exchange in May, Polymarket is seeking fresh capital that would value the company at more than $20 billion. Reports indicate Kalshi is negotiating a new round that would price the business at $40 billion, coming on the heels of its June rollout of perpetual futures.
Both companies are said to be considering going public as early as next year. For everyday investors sizing up this space, the key is not just how much trading is happening, but what kind of trading it is and who is doing it.
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