In August 2023, MyForexFunds was shut down overnight. Regulators in both the United States and Canada froze the company’s assets, cut off its CEO from his own accounts, and effectively erased one of the largest prop firms in the world in a matter of hours. The CFTC alleged fraud. The headlines were devastating. Dozens of competing prop firms quietly benefited from the sudden exit of a major competitor. And 120,000 traders around the world lost access to their accounts, their pending payouts, and in many cases, months of work.
In May 2025, US District Judge Edward S. Kiel dismissed every single allegation against MyForexFunds with prejudice, meaning the case cannot be refiled. He did not just dismiss the case. He sanctioned the CFTC itself and ordered it to pay 3.1 million dollars in attorney fees, finding that CFTC staff had deliberately made false statements to the court, including mischaracterizing a legitimate 31.5 million Canadian dollar tax payment to Canada Revenue as asset dissipation, despite having email documentation confirming its nature. In February 2026, the Ontario Superior Court ordered the Ontario Securities Commission to pay an unprecedented 80,000 Canadian dollars in costs, more than five times the highest previous award against the OSC. The company’s assets were returned.
The Story Behind the Story
Murtuza Kazmi, the CEO of MyForexFunds, had paid out more than 290 million dollars to traders across 80 countries before the shutdown. The company had been one of the most active operators in the funded trading space. The CFTC’s case, as the courts eventually found, was built on misrepresentations. Agency staff obtained an emergency asset freeze using statements that the Special Master later described as made in bad faith and in violation of their duty of candor to the court.
In a January 2026 interview, Kazmi described what the shutdown meant for him personally: seven months without a single dollar to his name, unable to provide for his family, watching his global workforce lose their jobs overnight through no fault of their own. He described the experience in terms that are difficult to read without acknowledging that what happened to MyForexFunds was not the outcome of genuine regulatory enforcement. It was the outcome of regulatory overreach built on fabricated claims.
As of February 2026, MyForexFunds announced that traders who had valid, verified payout requests in August 2023, the moment of the shutdown, would be eligible to receive their funds. The company is conducting a full financial, operational, and technical systems review before committing to a relaunch timeline. Kazmi has signaled that a comeback could involve partnerships with some of the firm’s former major competitors.
What This Tells the Prop Trading Industry About Regulatory Risk
The MyForexFunds case is the most consequential legal event in the history of the retail prop trading industry, and it is not discussed enough in those terms. What it demonstrates is not simply that a specific regulatory action was mishandled. It demonstrates that the CFTC, operating in an environment where the prop trading model is poorly understood and politically convenient to target, is capable of taking actions that destroy a company and harm over a hundred thousand traders on the basis of false information. And the consequences for those responsible were 3.1 million dollars in fees, paid not by the individuals who made the false statements but by the institution that employed them.
For futures prop firms specifically, including Topstep, which operates with NFA registration and Topstep Brokerage as a CFTC-registered introducing broker, and Apex Trader Funding, which has navigated the CFTC’s evolving interest in the sector while maintaining the largest payout volume in the US futures prop space, the MyForexFunds case is both a warning and a precedent. The warning: regulatory intervention can come quickly, on the basis of allegations that may not withstand scrutiny, and the damage is done before the legal process plays out. The precedent: courts will hold regulators accountable for misconduct, even if accountability comes two and a half years after the fact.
How Traders Should Reframe the Regulatory Risk Conversation
Most discussions of regulatory risk in the prop trading space focus on the risk to traders from unregulated firms. This is legitimate and important. But the MyForexFunds case adds a second dimension: the risk to traders from regulatory action against prop firms that may ultimately be found unwarranted. When MyForexFunds was shut down, its traders were collateral damage in a regulatory action that was later found to have been built on false statements. Their accounts were frozen, their payouts were denied, and their legal recourse was limited to waiting for courts to resolve a case that took nearly two years.
TradeDay and BluSky Trading, two of the operators most focused on legitimate funded capital access in the US futures market, have structured their operations around real broker account transitions and clear operational rules that minimize the surface area of regulatory ambiguity. The cleaner and more transparent a firm’s operational structure, the smaller the target it presents to regulatory overreach. This is a practical consideration, not just a philosophical one.
MyFundedFutures, which has maintained competitive operations throughout the 2024 to 2026 industry consolidation period, has done so partly by staying out of the kinds of aggressive marketing claims and opaque operational practices that tend to attract regulatory attention. The firms that have built sustainable funded trader communities in the US market share a common trait: they are not trying to maximize challenge fee volume at the expense of operational credibility.
The Return of MyForexFunds and What It Means
The potential return of MyForexFunds to the market in some form is a story with no precedent in the prop trading industry. A company shut down by regulators on the basis of fraud allegations, fully vindicated by two separate court systems in two separate countries, its CEO awarded millions in legal fees from the very agency that targeted him, is preparing to relaunch. If the return is executed with the transparency and trader commitment that Kazmi has signaled, it will be the most remarkable comeback in the industry’s short history.
For the futures prop trading community specifically, the lesson is one about due diligence applied in multiple directions. Due diligence on the firm you choose, to ensure it is operationally legitimate. Due diligence on the regulatory environment in which it operates. And due diligence on the claims made against firms you may be tempted to dismiss on the basis of regulatory headlines alone. The MyForexFunds story is a reminder that headlines are not verdicts, and that the prop trading industry is complex enough to produce outcomes that defy the simple narratives that initially surround them.
Conclusion
The CFTC was fined 3.1 million dollars for lying to shut down MyForexFunds. The Ontario Securities Commission was ordered to pay 80,000 Canadian dollars in unprecedented costs. A company that paid 290 million dollars to traders was destroyed overnight and has spent two and a half years rebuilding. This is not a story about a single firm. It is a story about the fragility of the regulatory framework around an industry that governments understand poorly and have powerful incentives to control. Every futures prop trader operating in the US market today should understand this story, because it describes the most consequential collision between the prop trading industry and the regulatory system that has yet occurred.
