A prominent Kalshi trader says he asked the exchange to delay a $3.3 million Spotify-market settlement while its enforcement team examined signs of artificial streaming. Kalshi paid the market minutes after its final response, a day before Spotify stripped 523,000 fraudulent streams from the winning song.
Key Takeaways
A trader asked Kalshi to delay settlement while suspected manipulation was investigated.Kalshi settled the $3.32M market minutes after its enforcement chief responded.Open interest in the winning bracket rose from $2K to over $70K before the surge.Davies said he first contacted Kalshi CEO Tarek Mansour after detecting abnormal US-only streaming increases in several songs as June approached its end. Mansour referred him to Robert DeNault, Kalshi’s head of enforcement and legal counsel, and Davies sent the company his analysis of the streaming activity and related trading positions.
Davies asked Kalshi to “hold off on paying out the market until an investigation has been completed.” DeNault responded that the exchange was examining the information and would investigate suspicious trading on its platform, but said “the main point of contention is with Polymarket, not Kalshi.”
The market’s final surprise involved Malcolm Todd’s “Earrings,” which rose approximately 70% in a day and reached No. 1 on Spotify’s June 29 US chart. Davies calculated the Sunday-to-Monday jump as an 11.24 sigma event, or roughly a one-in-77-octillion chance of occurring randomly. Of approximately 200 songs charting on both days, 195 declined and four rose – two of them the tracks he had already flagged. Traders had priced “Earrings” at about 2.5% in the preceding week, meaning roughly a 20-fold return for anyone holding the outcome.
Davies told DeNault that Polymarket had not offered an “Earrings” outcome at all and that Kalshi’s private records could reveal who accumulated positions on Todd before the surge. DeNault replied six hours later that “only Spotify can verify” whether the data reflected genuine listening or manipulation, adding that others had identified “some plausible reasons” the numbers might be organic. Kalshi settled the market minutes after sending that response.
DeNault also wrote that Kalshi was not seeing evidence of traders suspiciously benefiting from the numbers. Davies counters that open interest in the “Earrings” bracket climbed from $2,000 to more than $70,000 in the days before the disputed streams, while comparable long-shot brackets saw no increase. He also notes the exchange applied no comparable urgency to undisputed results: an Olivia Rodrigo win went unpaid until he flagged it three days later, and a Michael Jackson win took over a week.
The following day, Spotify removed 523,000 streams from the cumulative totals for “Earrings,” enough to have placed the song fourth rather than first for June 29. Spotify does not revise its published daily charts retroactively, however, so the original chart Kalshi settled against remains unchanged – a distinction several outlets have reported incorrectly as a chart correction.
Spotify has not identified who generated the artificial streams or established that the activity was intended to manipulate a prediction market. There is no evidence implicating Todd or his team, making any claim that a Kalshi trader bought the streams unproven.
Kalshi has stopped listing new Spotify markets, but its July contract for artists reaching No. 1 in the US remains open and actively traded, having attracted approximately $894,000 by Monday.
