In August 2023, the Commodity Futures Trading Commission froze the assets of MyForexFunds, a Toronto-based prop trading firm that had collected more than $310 million in fees from over 135,000 customers. The regulator alleged the firm acted as the counterparty to its customers' trades and manipulated outcomes. Now, a new generation of onchain prop firms is doing the same thing — but they're not hiding it.
The business model that depends on failure
Prop trading firms sell a paid exam. Customers pay a fee — anywhere from $50 to a few thousand dollars — to trade a simulated account. If they hit a profit target of roughly 10% without breaching a drawdown limit, they become “funded” and keep about 80% of the profits. The catch: pass rates are extremely low. FTMO, the market leader, reported a Phase 1 pass rate of about 8% in 2024. Topstep's 2025 Combine pass rate was 16.8%. Overall, only 5% to 10% of entrants ever pass the evaluation, and just 5% to 7% ever collect a payout.
The math is simple: fees from the vast majority who fail far exceed the payouts to the few who succeed. FTMO generated $310 million in revenue in 2024. FundedNext, another major player, estimated its 2024 revenue at over $100 million.
The conflict of interest — now out in the open
After passing, funded traders often discover that their trades are not sent to real markets. Instead, the firm internalizes the orders — a practice known as B-booking. When a firm B-books a trader, it profits directly when that trader loses. The conflict is obvious: the firm has a financial incentive for its customers to fail. MyForexFunds tried to conceal this arrangement. The new onchain prop firms, roughly six months old as of mid-June 2026, openly document that they act as the counterparty to their customers' trades.
Some firms use a hybrid model: they A-book (pass to real markets) the traders they believe are likely to win, and B-book the ones they expect to lose. Either way, the firm profits from the spread or from the trader's losses.
Why the onchain shift matters
By putting the terms on a blockchain, these firms make the conflict transparent — but they don't eliminate it. The underlying business still depends on most customers failing. The difference is that now a trader can see, before paying a fee, that the firm is betting against them. Whether that transparency changes behavior — or regulators' response — remains an open question.
The CFTC's action against MyForexFunds sent a signal. But with onchain firms openly codifying the same structure, the next enforcement case may test whether disclosure is enough to avoid liability.
