MyForexFunds (MFF) website is disabled. Is this the end of the proptrading leader?

MyForexFunds (MFF), so far one of the world leaders in proptrading industry, will probably disappear from the market for good. The company's website has been completely disabled, while it was still operational a week ago although it was displayed on it "temporary" notice of suspension of operations. Has the nail in the coffin been finally hammered by the American justice system?

Will MyForexFunds cease to exist?

At the beginning of September We reported on allegations from American and Canadian regulators that were directed at MyForexFunds. Already then, as a result of initiated proceedings, the provision of services by MFF was suspended, and a laconic message appeared on the website briefly describing the cause of the problem. September 11 this year the first trial was to take place, which, as can be assumed, did not go in favor of the accused. Moreover, the CFTC's statement showed that the supervision was extremely determined to achieve its goal.

“The CFTC's case against the MyForexFunds defendants is symbolic of our commitment to eliminating retail fraud in our markets.” said Director of Enforcement Ian McGinley.

In the course of ongoing court proceedings American regulator CFTC sought compensation for defrauded investors, restitution of ill-gotten gains, civil monetary penalties, a permanent trading and registration ban, and a permanent injunction against further violations of the Commodity Exchange Act (CEA).

Did MFF work like a scam?

According to the indictment, operating under the name "MyForexFunds", allegedly offered retail customers the opportunity to become "professional traders", by participating in the so-called paid investment challenges. These were supposed to be a stage of verification of traders' abilities. After successfully completing the challenge, traders were to move to real accounts and use money TradersGlobal enter into transactions with external parties "liquidity providers". A share of the profits from these transaction transactions was to be divided between the trader and the trading company. MMF assured customers that "Your success is our business" i "we only make money when you do". However, in reality, Traders Global – and not external "liquidity provider" – was the counterparty to essentially all customer transactions. In practice, this meant that traders did not trade on the market but directly with Traders Global, which "shared" your funds to trade.

The accused is also accused of using Traders Global's actions to actively and adversely affect the chances of making profits by traders, using various pretexts to close their accounts, incorrectly calculating commissions and manipulating capital movements and prices. This was supposed to contribute to a reduction in profits and more frequent "failures" from challenges, which consequently led to the termination of cooperation. MFF/Traders Global was supposed to apply to the entire procedure "specialized software", i.e. something like Virtual Dealer - MT4/5 plugin used by dishonest Forex brokers.

This would mean that the diagram looked something like this. The trader was purchasing a share of the trading challenge:

• if he did not pass the selection due to his mistake -> the profit from the challenge went to the MFF account
• if he was on the verge of passing the challenge -> MFF could "help" itself so that the trader did not ultimately pass the challenge
• if he passed the challenge -> in the real account phase MFF / Traders Global could manipulate the prices / platform in such a way that on a slightly suspicious occasion the challenge ended (e.g. due to violation of drawdown limits), the profit was minimized (e.g. by charging a commission ) or looked for a pretext consistent with the contract to breach the terms.

Ultimately, everything was aimed at ensuring that the trader completed the stage on the Live account as quickly as possible and took part in the challenge again.

135 thousand customers, hundreds of millions of dollars

As initially estimated by the CFTC, the MyForexFunds / Traders Global offer was extremely popular around the world. Only from 2021 to participate in the so-called As many as 135 people signed up for investment challenges. customers, paying a total of at least USD 310 million for them. The company's founder, Murtuza Kazmi, allegedly used the proceeds from the fraud to purchase luxury goods such as expensive cars and residences. On its Twitter account, the IFF boasts that over 60 people have successfully completed the challenge. clients, but we can safely assume that this is not true, because unofficial statistics say that less than 3% of candidate prop traders pass the challenge stage.

MyForexFunds official Twitter profile (X).

Proptrading without regulation and… without trust?

Proptrading still remains in many regions of the world the so-called Gray area, and proptrading companies often look for solutions to bypass local regulations and avoid exposure to regulators. Various provisions are used in contracts that minimize costs and escape the regulatory zone, e.g. by stipulating that the trader who manages the funds is not an employee of the company and concludes transactions only on a demo account, which are then allegedly further copied to the company's real accounts (thanks to this does not have to have any management licenses and the proptrading company minimizes its costs) or the settlement of any profits takes place only on the basis of an invoice.

In the case of MFF, settlements were made via the platform Share, which is an intermediary between "freelancers" and contractors (in short: if a freelancer performs some services for a given company, Deel issues an invoice and transfers funds to the contractor). Withdrawals could also be made in cryptocurrencies, which she helped with giełda kryptowalut Coinbase. Many proptrading companies use a similar solution.

As a result of the MFF scandal, the CFTC's suspicions also fell on Deel, which has allegedly processed over 40 in recent years. transactions worth USD 72 million to traders.

An anonymous employee of the Deel platform said:

We had no idea this was a problematic industry. The results of all the tests we did were normal. If the CFTC determines that a company is in trouble, we immediately discontinue services. We also cooperate with the CFTC and respond to their inquiries. We will screen each prop trading company to see if it may cause problems…

The situation with the company MyForexFunds, which will soon (probably) be officially named financial pyramid, will certainly effectively undermine trust in the entire prop-trading industry and the solutions it uses, and will cause problems for payment intermediaries who cooperate with them. It can also be assumed that as a result of such a huge scandal, regulators from other countries will start to look more closely at prop-trading companies. What will come of this? We'll see.