Earlier this week, Kalshi announced that it plans to implement new market integrity measures that allow traders to report suspicious trading activity. In a social media post, Kalshi Head of Enforcement Robert J. DeNault informed followers that “market integrity is a more than just a lofty goal for us. It’s the reason we collect identification info from every trader, why we surveil our markets 24/7, and why we continue to expand our capabilities to prevent, detect, and punish misconduct.”
DeNault went on to say “the work is never done, but we are proud to mark yet another big step today in leading the prediction market industry on the issue of integrity.” The updates were announced just a few weeks after the prediction exchange revamped customer account security by auto-enabling Face ID and requiring some traders to use two-factor authentication when logging in.
Kalshi’s new market integrity updates include three new tools that traders on the app can make use of.
This is an in-house rating that notifies traders if the market they’re viewing is evaluated as being susceptible to manipulation. Markets that have a heightened risk of insider trading or can easily be manipulated will have special requirements to access and may limit traders depending on how great the perceived risk is.
This feature probably won’t come into play for high volume markets tied to professional and collegiate sports. However, the risk scoring could make consumers aware that a specific market can be resolved directly by one individual.
Before being able to participate in some of the higher risk markets, Kalshi may request that a user submit employment information by uploading and sending documents to Kalshi’s integrity team via email. This process is expected to be similar to protocols that Kalshi follows for Know Your Customer (KYC) verifications.
By requesting employment data to trade on high risk markets, Kalshi hopes to identify potential insider trading threats Similar to KYC, it is anticipated that this particular customer data request will become more stringent depending on the amount that an app user is attempting to trade. Accounts that do not have a history of suspicious activity or only make a few micro trades may not be required to submit employment information to access a high risk market until a certain monetary trading threshold is reached.
Kalshi customers can now access an in-app tool that sends complaints related to potential insider trading and market manipulation directly to the exchange’s security team. This “intake system” can streamline the process of deciphering whether a certain market is receiving a higher number of complaints, and should therefore have its risk score reassessed.
“Every market on Kalshi has reporting tools for users to submit whistleblower tips. These tips go straight to our surveillance team, which monitors the feed 24/7,” said Kalshi in an official statement published Tuesday. “Additionally, we have built internal alerting controls to receive and handle whistleblower tips we receive from our traders. If you see suspicious activity on the platform, report it.”
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