IS THIS THE END OF MY FOREX FUNDS?🚨

Yesterday (03/09/2023), we learned in depth about the complaint made by the CFTC (Commodity Futures Commission of the United States) to My Forex Funds (trading funding accounts company).
This entity comments that My Forex Funds and its CEO, Murtuza Kazmi have participated in a large-scale fraud involving leverage, margin, access to Forex and commodities funding, etc…. They are also accused of misleading their clients, the retail traders, as well as engaging in misleading advertising.

In order to understand it in a simple way, we must know that traders who make use of funding accounts, acquire capital from a broker. In the case of My Forex Funds, the broker allegedly used is called Traders Global’s.

In the published indictment, the CFTC rules that My Forex Funds offered Trades Global’s money against liquidity providers, thus sharing the profits they made from their trades (obviously this occurs once the appraisal is approved). In exchange for this service, clients (traders) paid a fee in the form of commissions to cover equity levels in the accounts, which they call drawdown limit.

What are the Allegations for which My Forex Funds is being sued?

One of the most important reasons is the alleged misrepresentation that My Forex Funds made to its clients, leading them to believe that if they won, so did the company. The CFTC considers My Forex Funds to be a fraud after commenting that the funding company was the counterparty to its traders, specifically 130,000 people, who provided it with a total profit of $310 million, making them believe at all times that they were on its side. To be the counterparty means to be the other party participating in a financial operation, in this case, My Forex Funds.

They clarify that it is illegal for the company itself to be the counterparty to clients. All counterparties must be regulated and registered.

My Forex Funds claimed that real funds were traded against third parties, which turns out to be allegedly false after it became known that at no time were the accounts, for the most part, real but demos. As well as trading against third parties, the CFTC indicates that it is against themselves.

On the other hand, there is the qualification by CFTC, which defines My Forex Funds as a Ponzi Scheme, since they paid successful traders with the losses of other traders (evaluations, commissions, etc).
It can also be read that the CFTC exposes that My Forex Funds applied features of an unknown nature to make it difficult for its clients to succeed.

Difficulties applied by My Forex Funds to its Clients

1. Use a “drawndown limit” as a pretext to close the account.

2. Modify the commissions that were marked on the accounts in order to reduce their capital.

3. Use of specialized software to turn the odds in favor of My Forex Funds, for example, delaying the execution of orders by simulating server lag.

4. Sending orders of the best traders to a different counterparty (presumably they were also themselves) to use a software to increase the spread. Thus reducing the profits of these traders.

They have acquired a total net profit of $172 million at the expense of this allegedly deplorable strategy.

Will My Forex Funds Disappear?

Just as days ago we commented that it was not something worrying (from our point of view), with the new news they have been communicating, we believe that it may be the end of this company.

In any case, it will be positive for the retail trader, as this could provoke a massive regulation in the funding companies and would lead to safer investment alternatives for traders who depend on funding accounts.

In the event that they cease activity indefinitely, companies with optimal regulations will appear to invest in them. As it is a profitable business model, it only needs someone who knows how to manage it in the right way.

DISCLAIMER: All the information provided above has been extracted from the official document of the Commodity Futures Trading Commission (CFTC). It is important to note that the above offenses are alleged and there are no final judgments issued against My Forex Funds in connection with these matters. The presumption of innocence is a fundamental principle in the legal system, and any accusation must be treated with due diligence and respect for the legal rights of the accused.