MyForexFunds collapse: what actually happened?

What MyForexFunds was — and how big it got

MyForexFunds launched in 2020 and grew rapidly to become one of the largest retail prop firms in the world by 2022. It operated under the corporate entity Traders Global Group Inc., registered in Ontario, Canada. At its peak it had over 135,000 registered clients across dozens of countries. Its marketing emphasised accessible challenge fees, fast payouts, and high profit splits — exactly the combination that drives viral growth in the prop trading community.

The firm offered two-step evaluation challenges. Traders would pay a fee (typically around $84 for a $10,000 account up to several hundred dollars for larger accounts), then attempt to pass two phases: Phase 1 required hitting a 10% profit target without breaching a 5% daily drawdown limit or an 8–10% maximum drawdown; Phase 2 required hitting a 5% profit target under the same drawdown rules. Passing both phases issued a 'funded' account. Those drawdown rules — 5% daily and 8–10% maximum — were standard for the industry. What was not standard was what regulators alleged was happening behind the scenes: the distinction between a firm genuinely capitalising trader accounts versus using a demo account structure funded entirely from incoming fees is the crux of what regulators alleged MFF got catastrophically wrong — or deliberately concealed.

Understanding the drawdown rules: daily limit vs trailing maximum

MFF's challenge rules included two drawdown limits that every applicant needed to understand — and which many misread. Getting these wrong is one of the most common reasons traders failed MFF challenges (and fail challenges at every other firm). The collapse makes this an even more important point: if you are evaluating any prop firm's challenge structure, these two rules are the technical crux.

The daily drawdown limit (5% at MFF) is calculated against your account balance at the start of each trading day. On a $100,000 account, your equity cannot fall below $95,000 at any point during that day — including on open positions. This catches traders who think only closed trades count. If you are down $3,000 on a closed trade and an open position is floating $2,100 underwater, you are at $94,900 and breached. The day is over. This rule resets each morning, meaning a bad day ends your challenge even if your overall account is profitable.

The trailing maximum drawdown (8–10% at MFF, depending on the account type) works very differently and is materially harder than the percentage suggests. It does not measure from the initial balance — it trails peak equity. If your $100,000 account grows to $108,000, your drawdown floor rises to $98,000 (i.e., $108,000 minus 10%). A subsequent pullback to $97,999 fails the challenge — even though you are still ahead of your starting balance in absolute terms. This is the rule that catches experienced swing traders who run strong early, build equity, and are then undone by a normal mean-reversion week. You can be net-positive on the challenge and still fail because your high-water mark raised the floor to a level your equity could not hold.

Confirm with any firm you evaluate: does the trailing drawdown trail on closed equity only, or on real-time equity including open positions? The latter is far more aggressive — a floating loss can trigger failure on a position you have not yet closed. Some firms trail on closed P&L only; others trail on peak real-time equity. The difference is significant for traders who hold positions overnight or across news events.

The CFTC and OSC action: what was actually alleged

The CFTC complaint, filed in the Northern District of Illinois on 30 August 2023, and the parallel Ontario Securities Commission emergency order, alleged multiple forms of fraud and misrepresentation. The central allegation: MFF told traders they were receiving funded accounts backed by real capital, when in practice payouts were being sourced from incoming challenge fee revenue. The regulators characterised this as a form of Ponzi-adjacent misrepresentation — traders at any given time were effectively being paid by money received from newer traders, not from any underlying trading performance.

Additional allegations in the CFTC complaint included claims that MFF altered its trading rules post-challenge to make it more difficult for funded traders to reach payout thresholds, and that the firm used a plugin on its MetaTrader infrastructure that detected accounts it identified as highly profitable and subjected them to wider spreads or execution disadvantages. This latter allegation — if proven — would mean MFF was actively working against its own funded traders once they demonstrated the ability to extract money from the system. Murtuza Kazmi, named personally in the complaint, was alleged to have been directly involved in decisions to use this plugin.

• Misrepresenting that funded accounts were backed by real trading capital
• Using challenge fee revenue to fund trader payouts (not trading profits)
• Allegedly altering T&Cs post-challenge to reduce payout eligibility
• Allegedly using a MetaTrader plugin to disadvantage profitable funded traders
• CEO Murtuza Kazmi named personally in the CFTC complaint

What happened to traders when the firm shut down

When the emergency court order was granted, the effect was immediate and irreversible. MFF's trading platforms went offline. Funded accounts became inaccessible. Traders with outstanding payouts — some waiting weeks for scheduled withdrawals — received nothing. The freeze applied to approximately $310 million, which was held across various accounts. This did not mean $310 million was available to distribute to traders; regulatory freezes preserve assets for the enforcement and litigation process, and distribution to individual claimants is a separate legal process that takes years.

Traders fell into several categories of harm: those who had paid challenge fees and were mid-evaluation (money gone, no recourse via product), those who had passed and were in their funded phase but had not yet requested a payout (funded status gone), and those who had pending payout requests in the queue (most likely outcome: payout never arrives). There was no compensation scheme covering this product in any jurisdiction — the evaluation fee model is unregulated as a category, meaning no FSCS (UK), no ASIC compensation, no CDIC (Canada) protection applied. Traders were unsecured creditors of a firm now in the hands of receivers.

Why the business model made this possible

The structural fragility of the retail prop firm model is not unique to MFF — it's inherent to the category. Most retail prop firms are not trading your profits against live markets. They sell you an evaluation service, and your funded account operates in a simulated environment. The firm's economics depend on: challenge fee revenue exceeding payout obligations. If pass rates and payout demands rise faster than fee income, the firm becomes insolvent. FTMO, the oldest and most established firm in the space, has been transparent about its model and has a 10+ year payout history, but even FTMO is not a regulated financial institution and is not providing you with a regulated investment product.

Where MFF allegedly crossed from structural fragility into fraud was the active misrepresentation of what 'funded' meant, and the alleged manipulation of funded accounts to suppress profitable traders. A firm can legally operate a challenge-fee model without live market exposure. It cannot legally tell traders their accounts are backed by real capital if they are not, and it cannot legally modify the rules of the product after the trader has paid and passed. The CFTC's willingness to bring this action signalled that the US and Canadian regulators would look at the substance of what is being sold — not just whether the product is registered under a securities licence.

The lessons: what every prop trader must change after MFF

MFF was not a small, obscure operator. It was the market leader. It had Trustpilot reviews, a Discord community, affiliate partners, and verified payout screenshots circulating everywhere. None of that was evidence of structural soundness. The lesson is not 'avoid obscure firms' — it is to apply a different set of checks entirely, ones that don't require you to trust the marketing material.

The practical changes that MFF demands of every trader evaluating a prop firm: First, treat your evaluation fee as money you will never see again. The upside is a funded account opportunity; the fee itself is gone from the moment you pay. Do not pay an evaluation fee with money you cannot afford to lose. Second, verify the legal entity and domicile before paying. Look up the registered company name (not the trading brand) in the relevant corporate registry. Traders Global Group Inc. was a registered Canadian company — but the entity structure and the accounts holding client funds were spread across multiple jurisdictions. Knowing 'the company is registered' is not enough; you need to understand what entity is actually holding your money and what legal system governs it. Third, if you are building a meaningful funded account book — multiple accounts across multiple firms — diversify across at least two independent firms. MFF traders who had accounts at both MFF and FTMO lost half their positions; traders who were MFF-only lost everything. Fourth, ask before you pay: 'Who is the counterparty to my funded account?' If a firm's documentation does not clearly answer this, that is a disqualifying gap. Fifth, document the T&Cs you agree to on the day you pay. Screenshot them. A firm that subsequently changes the rules has breached the terms you signed, and evidence of the original terms is the only leverage you have.

• Treat the evaluation fee as fully at risk — never pay what you cannot lose
• Verify the registered legal entity in the corporate registry, not just the brand name
• Diversify across at least two independent firms if building a funded account book
• Ask explicitly: who is the counterparty to my funded account, and what backs it?
• Screenshot T&Cs on the day you pay — document the exact version you agreed to
• Payout history and Trustpilot reviews are necessary but not sufficient — MFF had both

What MFF means for the broader prop firm industry in 2026

The CFTC action against MFF was the first major regulatory enforcement action in the retail prop trading space. It will not be the last. The CFTC's position — that the funded account model can constitute a commodity trading operation subject to its jurisdiction depending on how it is structured and marketed — has shifted how every serious firm in the space thinks about compliance. Since the MFF action, there has been increased discussion among prop firms about regulatory licensing, transparency of corporate structure, and separation of client-related funds.

The period from mid-2024 to 2025 saw a broader shakeout: MetaQuotes began revoking MetaTrader licences from firms it considered non-compliant, and an estimated 80–100 firms either closed or suspended payouts during this period. MFF was the most high-profile collapse, but it was not isolated. The industry is not finished consolidating. As of 2026, the firms with the strongest survival indicators are those with: multi-year verified payout histories, transparent corporate structures, jurisdictions with active financial regulators, and — where relevant — futures-specific operations under exchange regulation (TopStep, Apex) which carry a materially different and cleaner regulatory framework than spot forex prop firms. This is not financial advice; it is a reading of what the enforcement record shows.

Sources & further reading

• CFTC — Complaint against Traders Global Group Inc. (MyForexFunds)
• Ontario Securities Commission — MyForexFunds emergency order