The CFTC's fraud case against one of the largest prop firms ended in dismissal and sanctions against the regulator. The structural issues it put on the record still define how the industry is judged.
In August 2023 the US Commodity Futures Trading Commission brought a landmark enforcement action against one of the largest proprietary trading firms. Less than two years later the case was over, dismissed by the court, with the regulator sanctioned for its own conduct. None of the CFTC’s allegations was ever proven.
The case is still worth understanding, because it set out, in a federal court filing, the questions every evaluation-model prop firm is now asked.
The complaint, filed on 28 August 2023 in the US District Court for the District of New Jersey, named Traders Global Group Inc. (a New Jersey corporation), its Canadian counterpart of the same name, and Murtuza Kazmi, all doing business as “My Forex Funds.”
According to the CFTC’s announcement, more than 135,000 customers had signed up for the firm’s programme since November 2021, “paying at least $310 million in fees.” The regulator’s central allegation concerned who was on the other side of customers’ trades. It said customers were told they would trade the firm’s money “against third-party ‘liquidity providers’” and share in profits, but that in reality Traders Global, “not a third-party ‘liquidity provider’,” was “the counterparty to substantially all customer trades.”
The complaint also alleged practices that reduced customers’ chances of being paid, including terminating accounts on pretexts and using software that caused orders “to be executed at worse prices than appeared to the customer.” These were allegations only.
On 29 August 2023 a federal judge signed a statutory restraining order that froze the defendants’ assets and appointed a temporary receiver.
The case turned against the regulator. A court-appointed special master examined the CFTC’s conduct and found that it had made false representations to the court and had acted “willfully and in bad faith on several occasions,” including over its account of CAD 31.5 million in transfers. The special master recommended sanctions.
In May 2025 the court dismissed the CFTC’s case with prejudice and awarded the defendants their costs of bringing the sanctions motion. On 13 May 2025 the CFTC’s Acting Chairman, Caroline Pham, issued a statement acknowledging “willful and bad faith conduct by making multiple false statements to the Court.” She said the Division of Enforcement had “maintained a culture that the CFTC is above the law.”
The dismissal settled the case. It did not settle the questions the complaint raised about the evaluation model itself, and those are now the standard diligence questions for any prop firm:
The largest firms have moved closer to regulated finance. The clearest example is FTMO, the Prague-based firm founded in 2015, which completed its acquisition of the regulated broker OANDA Global Corporation in December 2025 for 8.79 billion Czech koruna, about $422 million, after approvals in several jurisdictions.
A prop firm that owns a licensed broker can answer the counterparty and execution questions in a way an unregulated evaluation business cannot. Whether regulators begin to treat challenge fees themselves as a financial product remains the open question for the sector.
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