The MyForexFunds Case: What Actually Happened, and What Most People Get Wrong About It
This is educational commentary for traders, not legal advice. The facts below are drawn from public court records and reporting and were accurate as of September 2026; parts of this story are still moving. Verify current status before relying on it.
In August 2023, one of the largest prop firms in the world was shut down overnight. Traders who had passed challenges, traders mid-evaluation, traders with balances waiting to be withdrawn — all of them woke up locked out.
What happened afterwards got far less attention than the shutdown, and it's the more important half of the story. If you only remember the headline from 2023, you have the facts almost exactly backwards.
The record
The US Commodity Futures Trading Commission brought an enforcement action against Traders Global Group Inc. — operating as My Forex Funds — and its founder, Murtuza Kazmi, alleging fraud in connection with its simulated trading model. The firm's assets were frozen, and its operations effectively stopped.
Then the case fell apart, and it fell apart on the regulator's own conduct.
A court-appointed Special Master, Jose L. Linares, found that the CFTC had misled the court in the enforcement action — pointing to errors in a sworn declaration and to steps taken to obscure the problem, characterised as intentional and in bad faith. He recommended the case be dismissed with prejudice and that sanctions be imposed on the agency.
On May 13, 2025, US District Judge Edward S. Kiel adopted that recommendation. The case was dismissed with prejudice — meaning those allegations cannot be brought again — and the CFTC was ordered to pay roughly $3.1 million in attorney fees as sanctions. That is an almost unheard-of outcome against a federal regulator. In the aftermath, five CFTC staff — four lawyers and one investigator — were placed on administrative leave.
The Canadian side followed the same direction. An Ontario court ordered a costs award against the Ontario Securities Commission in the related proceedings, and the receivership was unwound with assets returned over the following months.
By any reasonable reading, the firm was shut down on a case the courts found should never have been prosecuted the way it was.
The part almost everyone gets wrong
Here's where the popular version of this story goes off the rails, and it matters more than any other sentence in this article.
This was a procedural and misconduct ruling. It was not a ruling that the simulated-funding model is legal.
The substantive question the CFTC raised — whether presenting simulated accounts to fee-paying customers, with the firm effectively on the other side, amounts to something a regulator can act on — was never decided on the merits. No court examined it and blessed it. The case collapsed because of how the regulator behaved, not because a judge reviewed the business model and approved it.
You will see this misreported constantly, usually as "the courts ruled prop firms are legitimate." They didn't. They ruled that this particular agency prosecuted this particular case improperly, and that the defendants were entitled to sanctions for it. Those are very different things, and the gap between them is where a lot of confident nonsense lives.
What it's reasonable to take from it
Being honest about the limits of what was decided, a few things do follow:
Vindication for the defendants is real. A dismissal with prejudice plus sanctions is about as complete a legal outcome as a defendant can get. Anyone still repeating the 2023 allegations as established fact is simply out of date.
Regulators will likely change tactics, not goals. A rebuke this public tends to make an agency more careful about aggressive enforcement — and more inclined toward the slower routes: rulemaking, registration, classification. The pressure doesn't disappear; it changes shape.
The underlying legal question is still open. Because nothing was settled on the merits, a better-run case in the future could still test the same question. One agency mishandling one prosecution doesn't resolve the law.
The trader lesson has nothing to do with any of that. Every trader with money inside that firm was locked out for reasons that had nothing to do with the firm's trading, their own trading, or anything they could have predicted. It wasn't insolvency and it wasn't a scam — it was an enforcement action that later collapsed. And the money was still frozen for a very long time.
That's the durable takeaway, and it's not about legality at all. Counterparty disruption doesn't require wrongdoing. Which is a good argument for not concentrating everything you have in one place, at any firm, however large — a point that would have sounded paranoid in 2023 and looks like common sense now.
We track how the major firms operate — the rules, the payout behaviour, the fine print — because we work with them every week. More of that inside Prop Firm PH.
Mark Mangulabnan is the founder of Xuan Capital. He has traded for 11 years, rose to Country Manager at a CFD brokerage, and had a $20,000 payout featured by The Funded Trader.
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