The U.S. Commodity Futures Trading Commission froze the assets of Toronto-based MyForexFunds in August 2023 after the firm collected more than $310 million in fees from over 135,000 customers while lying about its role in trades and using software that worsened customer fills and closed winning accounts on technicalities. Now, a new generation of onchain prop trading firms is doing what MyForexFunds tried to hide: openly documenting that they are the counterparty — the house edge.
The MyForexFunds case
MyForexFunds presented itself as a prop firm that let traders pass an evaluation to get funded. In reality, it was running a B-book operation — internalizing trades and keeping losses from losing customers. The firm also secretly slipped customer fills to worse prices and shut down winning accounts over minor rule violations. The CFTC action froze the assets of the firm, which has not yet been resolved in court.
How the exam model works
Prop firms sell paid evaluations. A trader pays a fee — typically $50 to a few thousand dollars — to trade a simulated account. If they hit a profit target around 10% without breaching drawdown limits, they become “funded.” After that, they keep roughly 80% of profits. But most traders fail. Pass rates hover around 5–10% for forex firms and slightly higher for futures firms. FTMO, the market leader, ran $329 million in revenue in 2024 across 2.3 million open accounts and has paid out more than $450 million over ten years. FundedNext, a UAE challenger, cleared an estimated $100 million-plus in revenue in 2024.
B-book vs. A-book — the conflict
Prop firms decide which traders go to B-book or A-book based on the likelihood of winning. In B-book trading, the firm internalizes trades and keeps losses from losing traders. In A-book, orders go to real venues and the firm earns only spread or commission. The conflict is obvious: the firm benefits when B-book traders lose. MyForexFunds hid this. Today's onchain firms are transparent about it, marketing their house edge as a feature.
The economics of failure
The entire business model relies on fees from failing customers exceeding payouts to winners. With pass rates so low, the math works. Even after paying winning traders 80% of profits, the firms pocket the majority of evaluation fees. FTMO's revenue of $329 million in 2024 shows how lucrative the model is — especially when the firm is the counterparty on many losing trades. MyForexFunds' $310 million in collected fees was built on the same foundation, but the lies about being a neutral platform got them in trouble.
What remains unclear is whether regulators will turn their attention to the onchain firms that now openly document their role as the house edge. The CFTC set a precedent with MyForexFunds. The next case could test whether transparency is enough to avoid the same fate.
