CFTC v. My Forex Funds: What the Outcome Decided

On 13 May 2025 the US District Court for the District of New Jersey dismissed the CFTC’s case against Traders Global Group with prejudice and imposed Rule 11 sanctions on the CFTC, ordering it to pay the defendants’ costs, reported as more than $3 million. The dismissal turned on the agency’s conduct in the litigation. Whether evaluation fees and profit-share arrangements constitute regulated activity was never reached.

The procedural outcome and the substantive question get merged whenever this case is described. The outcome was a dismissal with prejudice and a sanctions order against a federal regulator — rare, and what the coverage was about. The question underneath the complaint — whether a firm that stands as counterparty to its own customers’ leveraged trades must register — was left exactly where it was found.

This is a research summary, not legal advice. The broader jurisdictional picture is in our map of what each regulator has actually said.

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What did the CFTC allege?

The case is Commodity Futures Trading Commission v. Traders Global Group Inc. (a New Jersey corporation) and Traders Global Group Inc. (a Canadian company), doing business as My Forex Funds, and Murtuza Kazmi. It was filed on 29 August 2023 in the US District Court for the District of New Jersey, No. 3:23-cv-11808-ZNQ-TJB.

In the CFTC’s complaint, the agency alleged fraud in connection with leveraged, margined or financed retail foreign exchange and retail commodity transactions, in violation of the Commodity Exchange Act (7 U.S.C. §§ 1–26) and the Commission’s regulations (17 C.F.R. pts. 1–190). According to the CFTC’s own press release announcing the action, the scale alleged was more than 135,000 customers since November 2021 and at least $310 million in fees collected (CFTC release 8771-23). The complaint also identified two marketing statements the agency said were misleading: “your success is our business” and “we only make money when you do”.

None of these allegations was adjudicated. They are what the agency pleaded.

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The procedural record, in date order

The dismissal and sanctions order itself is described here through the two law-firm publications that reported it and through the Special Master’s Report and Recommendation as posted on the CFTC’s own website; we did not obtain the signed order as a standalone public document. The costs figure and the administrative-leave detail come from trade press reporting of the ruling rather than from the docket. Where the row says the date is not established, that is because our sources describe the Special Master process without giving the date the report was issued.

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What was the legal theory, and why does it survive the dismissal?

The part of the complaint that still matters is not the fraud count. It is the structural characterisation underneath it.

In the CFTC’s complaint, the agency pleaded that the firm, and not a third-party liquidity provider, was the counterparty to substantially all customer trades — in the complaint’s words, that “Traders Global — not a third party ‘liquidity provider’ — is the counterparty to substantially all customer trades. When customers make money, it means that Traders Global loses money.”

That is not an argument that selling an evaluation is a regulated service. It is an argument that once a firm contracts as the opposite side of a leveraged retail transaction, the firm is a dealer in those transactions and must register as one, whatever the product is called in marketing. On that theory the label “challenge”, the presence of a fee, and the size of the firm are all irrelevant. What matters is who is on the other side of the trade.

What the Statutory Restraining Order actually found

On the same day the complaint was filed, the court entered a Statutory Restraining Order, Doc. 13. In it, the court made prima facie findings that the defendants had entered into — that is, acted as a counterparty to — leveraged foreign exchange and commodity transactions with retail customers, and that those transactions qualified as retail forex and retail commodity transactions within the meaning of Regulation 5.1(m), 17 C.F.R. § 5.1(m). It further found good cause to believe that the defendants had acted as a Retail Foreign Exchange Dealer without registration, contrary to Regulation 5.3(a)(6)(i), and had entered into retail commodity transactions off a registered exchange contrary to Section 4(a), alongside the fraud provisions at Section 4b(a)(2)(A) and (C) and Regulation 5.2(b)(1) and (3) (SRO, Doc. 13).

Prima facie is not a small qualifier. Findings at the temporary-restraint stage are made quickly, on the moving party’s papers, to decide whether to freeze assets — not after evidence, argument and trial. They are not adjudications. They were never tested to judgment, because the case ended before that stage.

What survives is a theory that a federal court found sufficient on the papers to justify an emergency freeze, and that no court has since rejected. That is why the case is still cited in this industry three years later. The same theory is available to any regulator, and a different theory — that the pooling of trader fees creates an unregistered commodity pool — is now being run by private plaintiffs, which we cover in the commodity pool theory being tested in three US suits.

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What did the Special Master find, and what did the court do with it?

The dismissal followed a Special Master process. Jose L. Linares, a former Chief Judge of the District of New Jersey, was appointed to examine the agency’s conduct in the litigation.

His report, published on the CFTC’s own website, recommended that the case be dismissed with prejudice and that sanctions be imposed. The finding underlying that recommendation was that the agency had misled the court. The specific item identified was a payment of CAD 31.55 million: the CFTC had presented it as evidence of misappropriation, when the payment was a corporate tax payment to the Canada Revenue Agency, and the agency was aware of the nature of the payment before it moved for the asset freeze (Report and Recommendation).

Those are the Special Master’s findings. The court’s action attached to them is the operative part: on 13 May 2025 Judge Edward S. Kiel dismissed the case with prejudice, imposed Rule 11 sanctions on the Commission, and ordered it to pay the defendants’ costs.

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What the dismissal established, and what it did not

Most published summaries go wrong here, in one direction or the other.

What it established.

1. The CFTC cannot re-file these claims against these defendants. That is what dismissal with prejudice means: the claims are extinguished, not merely withdrawn.
2. The agency’s conduct in the litigation was sanctionable under Rule 11, and the court so held.
3. The defendants were awarded their costs, reported as more than $3 million.

What it did not establish.

1. It did not decide the merits of any count. No court has ruled on whether the conduct alleged occurred.
2. It did not decide whether evaluation fees and profit-share arrangements constitute regulated activity. That question was raised by the pleadings and left unanswered.
3. It therefore made the model neither lawful nor unlawful. In the United States the evaluation product operates by default — there is no licensing regime for it, no capital requirement, and no rule requiring segregation of challenge fees — and a dismissal on the regulator’s conduct changes none of that in either direction.
4. It created no precedent in favour of the model. A dismissal on Rule 11 grounds is a disqualification of how a case was prosecuted, not a determination that the defendant’s business was lawful.
5. It did not remove the theory from circulation. The RFED characterisation in the complaint and the prima facie findings in the SRO stand undisturbed and are available to any regulator or private plaintiff who wishes to plead them.

The most common error in this niche is reading the first list as though it were the second. The claims are gone. The question is not.

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What the case cost, independent of the law

The Statutory Restraining Order freezing assets was entered on 29 August 2023. The case was dismissed on 13 May 2025. That is a period of approximately twenty months during which the freeze arising from the action was in place, and our sources record that the firm publicly indicated a return after the outcome (Finance Magnates).

We state only what those documents support: a twenty-month interval between the freeze and the dismissal, and a publicly signalled intention to return. In a business where a funded account buyer’s relationship with the firm depends on the firm being able to operate and pay, the duration of an action is a commercial event regardless of how the action ends. We do not have audited figures for the firm’s revenue or customer numbers before or after the freeze, and we do not publish estimates in their place.

What a challenge buyer can and cannot recover when a firm is disrupted for reasons unconnected to their trading is a separate question, covered in what a challenge buyer’s actual protections are.

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Five things a summary of this case usually gets wrong

1. The counterparty theory is the durable part. The complaint’s core characterisation — that the firm, not a liquidity provider, was the other side of customer trades — is the reason the docket is still relevant three years later, and it is untouched by the way the case ended. Whether any given firm is on that side of its customers’ trades is a question about that firm’s actual execution arrangements, addressed in whether a funded account is a real account.
2. The date is 13 May 2025 and the mechanism is Rule 11. Any summary that gives a different mechanism — a merits ruling, a settlement, a finding for either side on the facts — is describing something that did not happen.
3. ”With prejudice” binds the CFTC on these claims only. It binds no other regulator, no private plaintiff, and no future case on the same theory against a different firm.
4. Nothing in the outcome creates a consumer protection. No compensation scheme, no segregation requirement and no appeal body came into existence as a result of this case.
5. Read the SRO before citing the case. The prima facie findings in Doc. 13 are public, short and specific, and they say more about the industry’s exposure than the dismissal does.

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Written by the upme.com research desk. Every date and docket number above is taken from the filed documents or from the CFTC’s own publications, linked in the front matter; where a figure comes from trade press reporting of the ruling rather than from the docket, the text says so. Nothing here is a finding against any party, and nothing here is legal or investment advice. Corrections to the address on our sourcing page.

Sources

Every factual claim above is drawn from one of the documents below. Where a document has been superseded since the date given, tell us and the piece is corrected with a dated line.

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