My Forex Funds, a prop trading firm, has terminated its services as the Commodity Futures Trading Commission (CFTC) in the United States and the Ontario Securities Commission (OSC) in Canada have moved against the alleged scam of about $310 million.
Both regulators brought charges against Murtuza Kazmi, who operated My Forex Funds with his two companies, New Jersey-incorporated Traders Global Group Inc. and Canada-based Traders Global Group Inc. While the CFTC named both companies, the Canadian regulator is only taking action against the Canadian entity, along with Kazmi.
Regulators Bust My Forex Funds
According to the US regulator, My Forex Funds offered retail customers to become "professional traders" by trading with Traders Global's money against third-party "liquidity providers" and splitting any trading profits. Although the platform assured the public that it makes money when customers make money, in reality, Traders Global operated as a counterparty to substantially all customer trades, not as a liquidity provider.
Last Friday, the regulatory announcement alleged that Traders Global even minimized the probability of customers' profitability by using pretexts to terminate customer accounts and misleadingly assessing commissions to reduce customer account equity. The company even allegedly used manipulative software to execute customers' orders at worse prices. It only allowed a small number of "successful customers" to decrease customer profits and increase customer losses.
The platform has more than 135,000 customers who signed up for its trading program since November 2021 and paid at least $310 million in fees. Kazmi allegedly bought luxury homes and automobiles with the proceeds from the fraudulent action. He even transferred tens of millions of dollars to his personal accounts.
An Alleged Forex Fraud
The CFTC's complaint charged the defendants for "fraudulently soliciting customers to trade leveraged, margined, or financed retail foreign exchange (retail forex) and leveraged retail commodity transactions." The Canadian state regulator highlighted them for indulging in "provisions related to fraud, unregistered trading, and the illegal distribution of securities," adding that Kazmi and his Canadian firm are not registered in the country.
In the US, the CFTC received a statutory restraining order from the court freezing the assets of Kazmi and his two companies. The order also requires the submission of books and records for examination by the regulator, along with the appointment of a temporary receiver.
The OSC, which investigated My Forex Funds with the help of the CFTC, prohibits further trading in securities by the Canadian company and Kazmi.
"The CFTC's case against the 'My Forex Funds' defendants is emblematic of our commitment to stamping out retail fraud in our markets," said the Director of Enforcement, Ian McGinley. "Anyone offering or entering into leveraged retail forex contracts without registration, or offering or entering into leveraged retail commodity contracts off-exchange, is acting in clear violation of the law."
Response of the Platform
Now, My Forex Fund's website shows a termination of service notice. The companies cannot offer any service as their assets are frozen.
Important Notice 📢
— MyForexFunds (@MyForexFunds) September 1, 2023
Yesterday we learned that, without prior notice or discussion, a provincial securities regulator in Canada and the commodities regulator in the United States issued orders preventing us from trading securities or accessing funds in our bank accounts.
Until… pic.twitter.com/dKpxmx5axT
"Yesterday we learned that, without prior notice or discussion, a provincial securities regulator in Canada and the commodities regulator in the United States issued orders preventing us from trading securities or accessing funds in our bank accounts," the notice on the website states. "Until these freeze orders are lifted or modified, our business is effectively, and at least temporarily, frozen as well."
"We will be reaching out to the regulators to discuss their concerns, and the first court date to determine whether the freeze orders should be lifted or modified is currently scheduled for September 11 in the US, with another hearing later that same week in Canada.
