True Forex Funds follows My Forex Funds? Investors fear another scam exit
Proprietary trading firm True Forex Funds today announced a “temporary halt” to its services. The company said this move comes in the wake of MetaQuotes, the developer of the widely-used trading platforms MT4 and MT5, terminating True Forex Funds’ licenses.
Richard Nagy, CEO of True Forex Funds, addressed traders in a statement, explaining the unexpected disruption. According to Nagy, the license termination by MetaQuotes stemmed from True Forex Funds’ use of a third-party provider for equity synchronization. The provider, whose services have been used since 2021, is alleged to have connected to MetaTrader’s client terminal in a manner not fully acceptable by MetaQuotes.
Nagy expressed frustration over the abruptness of MetaQuotes’ decision, noting the absence of prior warnings or opportunities to replace the third-party provider. He highlighted the challenge of investigating a partner or supplier’s source code for legitimacy, which seems to be at the heart of MetaQuotes’ dispute.
True Forex Funds has reassured its clients of its commitment to resolving the issue. The firm is actively seeking to convince MetaQuotes to reinstate its licenses. However, Nagy also spoke about migrating trading accounts to a different broker if these efforts fail. He advised traders to close their positions before the market closure due to discrepancies in offered symbols if a migration becomes necessary.
This incident marks the second major disruption in the proprietary trading sector in recent months. It follows the shutdown of Canada’s My Forex Funds by US and Canadian regulators last September.
The lawsuit initiated by the CFTC accused MFF, its CEO, and associated entities of fraudulent activities exceeding $300 million, focusing on deceptive practices in leveraged retail FX and commodity transactions. Traders Global, part of MFF, reportedly acted as the counterparty to most customer trades, employing various tactics to impede customers’ profitable trading.
The CFTC’s complaint against My Forex Funds brought to light a range of deceptive practices, including unjustly terminating customer accounts, misleading commission assessments, and executing customer orders at unfavorable prices using specialized software. The legal actions extended beyond the US, with the Ontario Securities Commission imposing a temporary cease trade order against Traders Global and Kazmi.
The case raises important questions about the proprietary trading industry’s practices, particularly regarding drawdown rules and income generation from failed challenges, which are standard in many prop firms. As the case remains ongoing, there are aspects highlighted in the complaint that might be typical or common within the proprietary trading (prop) industry, creating a grey area in terms of regulatory scrutiny.