With just $50, you can get access to a live trading account worth over $5,000! This is the lure and promise prop firms like My Forex Funds uses to attract investors.
Unfortunately, these promises are often empty, and the firms making them are simply after the cash. One such example is the popular My Forex Funds.
How did a thriving company with over 60,000 customers and a reported excess of $1 billion in user funds end up being a scam that was shut down by the US CFTC?
Welcome to crypto forensics, My Forex Funds
The Beginning
My Forex Funds was founded in 2020 by Anurag Jaiswal. Jaiswal is a former trader who worked for several prop trading firms. He claimed that he had developed a proprietary trading algorithm that could generate consistent profits.
As a result, he was able to raise $10 million to launch My Forex Funds.
The Good Times
My Forex Funds had lots of customers. Within three years of their launch, they had over 60,000 active customers. The firm reported over $1 billion in user deposits on the platform.
Here’s A Little Explanation Of How Prop Firms Works
Let’s say Miss has $50, but he’s not sure how he can quickly turn that money into an 100x. He signs up with a prop firm with the $50 for access to a $5,000 trading wallet.
Here are the usual steps most prop firms ask customers to complete before accessing funds:
- Make non-refundable payment for an account
- Pass an evaluation period to test if you’re a good trader or not (usually 2 weeks)
- Complete some verifications
- Read terms and conditions (you split profits with the firm)
- You get access to the funds
- You start trading and maintain the rules
Everything was going well for My Forex Funds, to the point that the founder and other key members were spending lavishly on houses and cars
The Crack And Collapse
Many users of the firm have been concerned about the lifestyle of the founder and key members of the team.
More concerns came to light when users reported misappropriation of their funds. Below are the major issues facing the firm:
- The company made false and misleading statements about its trading performance. MFF claimed to have a high win rate and consistent profits, but this was not true.
- The company did not have adequate risk controls in place. This led to significant losses for investors.
- The company misappropriated funds from investors. MFF used investor funds to pay for personal expenses, such as luxury cars and real estate.
- The company engaged in unauthorized trading. MFF traded on behalf of investors without their knowledge or consent.
On August 29, 2023, the Ontario Securities Commission (OSC) issued a temporary order prohibiting My Forex Funds from trading securities or accessing its bank accounts. The OSC alleged that the firm had engaged in misleading and deceptive practices, including making false and misleading statements to investors about its trading performance and risk controls.
The CFTC also alleged that My Forex Funds had defrauded investors by misappropriating their funds and engaging in unauthorized trading.
As a result of the OSC and CFTC orders, MFF has been effectively shut down. Founder and CEO, Anurag Jaiswal, was barred from participating in the securities industry.
What Happens To Traders Who Have Money on My Forex Funds?
They are unlikely to get any of their money back. Trading on the platform has since ceased, and assets have been frozen.
Investors who were affected by the MFF scandal should contact a lawyer to discuss their legal options.
What Are The Lessons?
- Be suspicious of any firm that asks you to pay upfront fees. Legitimate prop trading firms do not charge upfront fees
- Be wary of high returns: Prop trading firms that promise high returns with little risk are often scams.
- Do your research: Before investing in any prop trading firm, do your research and make sure that the firm is legitimate. Check the firm’s registration status with the relevant regulatory authorities.
- Another thing I want to quickly add is that whatever information you find about the firm, compare it to industry standards. This way, you are sure of what the right information should be.
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