Kalshi Withdrawal Freeze Lawsuit: Trader Claims $24,293

An Illinois trader sued Kalshi in federal court in Manhattan on August 31, 2026, alleging the exchange refused to pay out an event contract and then blocked him from withdrawing $24,293.10 of ordinary cash from his account for more than seven months. The claims are his, unproven, and Kalshi has not answered them. The judge denied his emergency application the day he filed, and the free public record still names no lawyer for any Kalshi entity.

The case is Pernas v. KalshiEX LLC, No. 1:26-cv-07419 in the Southern District of New York, before District Judge Margaret M. Garnett. Everything described below comes from the verified complaint and the court's own orders, which we downloaded and read in full rather than taking from a summary - how we check everything we publish.

What does the complaint against Kalshi allege?

Two things, which the plaintiff is careful to keep separate. The first is a disputed payout. The second, and the one he asked for emergency help on, is the cash.

The contract is the one Kalshi publishes as WLEADER. The complaint sets out its payout criterion as satisfied if the President and Justin Trudeau "shake hands or speak to each other directly", and alleges that after trading had already begun Kalshi posted guidance saying phone calls would not count, language the filing says "was not included in the Event Contract's published terms" and was never adopted by formal amendment.

According to the complaint, Nicolas Pernas held 1,173,968 positions in that contract, which he says "should have paid $1,173,968 if resolved in accordance with the published contract terms". He alleges Kalshi instead resolved it against him, and that in the run-up it cancelled his resting orders at around 2:00 a.m. ET on December 28, 2025 "without notice or explanation", costing him order priority on roughly 20,000 contracts. He says he wrote to Kalshi on December 29 demanding the contract be resolved in his favour. Separately from that payout claim, he puts the loss from being cut off before the stated expiration at approximately $2,405,016.90.

He then alleges that on or about January 1, 2026 the displayed expiration time moved from 10:00 a.m. ET to 12:00 a.m. ET, and the contract was resolved negative before the published expiration - while, he says, his own orders were still executing at approximately 2:11 a.m. ET.

The second allegation is the money. From the complaint:

Now, over seven months later, Defendants have continued to prevent Plaintiff from withdrawing liquid funds from his account without providing a valid contractual, regulatory, or legal basis for doing so.

He puts that frozen balance at approximately $24,293.10, says he found the restriction on January 1, 2026 when he tried to withdraw, wrote again on January 9, and alleges the restriction was imposed because he disputed the result.

The complaint pleads nine causes of action:

1. Breach of contract
2. Breach of the implied covenant of good faith and fair dealing
3. Declaratory judgment
4. Conversion
5. Money had and received
6. Commodity Exchange Act, 7 U.S.C. section 25
7. Negligent misrepresentation
8. Fraud
9. New York General Business Law section 349, under which he seeks treble damages

These are allegations in a filed complaint and nothing more. Kalshi has filed no response on the public docket, so there is no operator account of any of it, and we did not find a second independent source for the underlying events - the complaint is the only one.

Has a judge ruled on the withdrawal freeze?

No. No court has decided whether the freeze is lawful. The only ruling so far is the denial of the emergency request, on day one, and the full operative sentence of Judge Garnett's August 31 order reads:

Because Plaintiff has failed to demonstrate the "single most important prerequisite to a TRO," Stonington Cap. Advisors, LLC v. Southfield Cap., LLC, No. 20-CV-06053 (ER), 2022 WL 3030514, at *5 (S.D.N.Y. Aug. 1, 2022), the motion for a TRO is denied.

That is a ruling on urgency and on nothing else. The case is otherwise alive and moving: the court ordered an initial pretrial conference on September 3, affidavits of service went on from September 3 through September 15, and three notices of appearance were entered on September 17, which is what brought the docket to our attention. Those three carry no filer on the free mirror, and the docket's own party list still shows no attorney for KalshiEX LLC, Kalshi Inc., Kalshi Klear LLC, LedgerX LLC or Rothera Exchange and Clearing LLC, so we are not going to say whose lawyers they are.

One entry, number 14 on September 3, is labelled "Notice of Voluntary Dismissal" with no text and no document on the free mirror, and an unnumbered entry the next day is labelled "Notice to Court Regarding Voluntary Dismissal", also bare. Which party or claim either one covers is not public, and the docket carries no termination date.

What if a sweepstakes casino freezes your balance?

The shape of this complaint is one sweeps players know. A disputed result, then an account restriction that starts right after the player complains, and a balance that sits there for months with no written explanation. That is the single most common grievance we see about sweeps redemptions, and it is rarely litigated because the amounts are small and the terms push it into arbitration.

Two differences are worth naming plainly. Kalshi is a CFTC-regulated exchange, not a sweeps casino, and it is not a brand we rank or review. And this trader had an obvious forum: he filed in federal court and got a judge to look at it within a day. Most sweeps terms would have sent the same dispute to private arbitration, which is why the 30-day arbitration opt-out window is the most useful clause in a rulebook nobody reads.

If your own redemption is stuck, the practical steps are in our guide to redeeming Sweeps Coins, the brands whose payouts we have actually timed are on our fastest-payout list, and the operators that stopped paying out altogether are on our blacklist of casinos to avoid. Where Illinois and New York stand is on their state pages.

This is not the only trader suing Kalshi over what it did to an account. Illinois has its own live case, covered in our report on the gambling-loss suit where a stay was denied, and a Senate candidate in Virginia sued the exchange on September 10 over a five-year suspension and a $6,229 penalty.

Sources & documents

• Verified complaint, ECF 1, filed August 31, 2026 - 23 pages, dated August 28, 2026, the source of every allegation, figure and quoted passage attributed to the plaintiff
• CourtListener docket, Pernas v. KalshiEX LLC, No. 1:26-cv-07419 (S.D.N.Y.) - read September 18, 2026, 21 numbered entries, the source of the verbatim August 31 order text and of the entry table. Its parties and attorneys list names only the plaintiff's counsel and no attorney for any defendant, which is why we attribute the September 17 appearances to nobody
• Southern District of New York electronic filing feed - the court's own list, timestamping the three September 17 notices of appearance at 22:17:10, 22:34:53 and 22:44:56 GMT
• Kalshi published contract terms for the contract at issue - the address the complaint cites; a live 2-page PDF whose text we could not extract, noted above

This piece reports allegations in a filed complaint and orders on a public federal docket. The allegations are unproven, Kalshi has filed no response, and nothing here is a finding of wrongdoing by anyone.

21+ only. Problem? Call or text 1-800-GAMBLER. Responsible gaming resources.