The Unregistered Commodity Pool Theory in US Suits

The theory asserts that pooling fees from many traders into common trading capital, with profits allocated proportionally to individual sub-accounts, makes the operator an unregistered commodity pool operator under 7 U.S.C. § 6m. It is being tested in three private US lawsuits filed in 2026, not by a regulator. All three are pending, and no court has ruled on the merits.

Every case described below is at an early stage. Nothing here is a finding against any defendant. Allegations in a complaint are allegations: they are one party’s account of the facts, filed to survive a motion, and they have not been proved. Where a firm has answered, we state its answer at the same length as the claim.

The attack surface is a different one from the surface most coverage focuses on. The regulator’s theory in the My Forex Funds docket was about who stands as counterparty to a trade. This theory is about what happens to the money before any trade is placed. The wider jurisdictional picture is in our map of what each regulator has actually said.

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What is a commodity pool, in plain terms?

A commodity pool is an enterprise operated for the purpose of trading commodity interests — futures, options and similar instruments — in which the funds of more than one participant are combined and traded as a common pot. Whoever runs it is a commodity pool operator, and under 7 U.S.C. § 6m an operator has to register with the CFTC unless an exemption applies. Registration brings disclosure to participants, reporting, and membership of the National Futures Association with it.

The evaluation-and-funding model has sat outside that regime for a structural reason. Pool operator status turns on pooling customer funds for trading; advisory status turns on advising others about trades; broker status turns on carrying customer accounts and taking orders. The model is built so that none of those descriptions fits: the trader buys an evaluation service rather than handing over money to be managed, and the firm’s published position is that it trades its own capital.

The element the theory attaches to is the aggregation step. If fees paid by thousands of individuals are not simply revenue but are, in substance, contributions to a common trading capital whose profits are then divided proportionally, then — on the plaintiffs’ argument — the pot is a pool and the operator is an operator, whatever the contract calls the payment.

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The cases

All three are pending as of 31 July 2026. None has produced a ruling on the merits of the commodity pool question.

In McCrudden v. Topstepfunded, the plaintiff, Vincent McCrudden, is proceeding pro se — without counsel; the named defendants are Topstepfunded LLC (Illinois), Topstep LLC (Delaware) and TopstepTrader LLC (Illinois), together with individual defendants including the firm’s founder. The same plaintiff appears in one of the two Apex matters, so the three suits represent two plaintiffs, not three.

Our reading is that three filings on one theory against two of the largest US futures evaluation firms is a pattern rather than an isolated filing — but a pattern of filings is not a pattern of rulings.

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What the plaintiffs argue

The counts in McCrudden v. Topstepfunded run wider than the pool theory alone. As pleaded, they include operation of an unregistered commodity pool under the Commodity Exchange Act at 7 U.S.C. § 6m and § 6o; fraud and manipulation counts under 7 U.S.C. §§ 6b, 6o and 9(1) and 17 C.F.R. § 180.1; controlling-person liability under 7 U.S.C. § 13c(b); and parallel state-law claims including breach of contract, breach of the implied covenant, fraudulent inducement, conversion, unjust enrichment, breach of fiduciary duty, unconscionability, and the Florida Deceptive and Unfair Trade Practices Act.

The pool count is the one that is new to this industry. The complaint anticipates the firm’s position — that it trades its own capital — and characterises that description as “a legal fiction”. The pleading’s account is that the firm solicits funds from large numbers of traders through subscription fees, combines those funds in linked master accounts used to trade on CME, CBOT, COMEX and NYMEX, and allocates profits back to individual trader sub-accounts on a proportional basis.

That is the plaintiff’s characterisation, filed in a complaint. It has not been established, and the firm disputes it.

The same theory is pleaded against Apex Trader Funding in the two Texas and Florida matters: that the capital described as proprietary is in substance formed from combined trader contributions, that orders are aggregated through a master account, and that payouts are a proportional distribution from that pot rather than a contractual profit share on simulated performance.

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What the defence argues

On the motion to dismiss in McCrudden v. Topstepfunded, the defence position is definitional and turns on the statutory text at 7 U.S.C. § 1a(10)(A). There is no commodity pool on these facts, the argument runs, because the plaintiff does not allege the things that make a pool a pool: he does not allege that he contributed capital to a pool, that he acquired an interest in pooled assets, that he shared in the pool’s profits and losses, or that he entrusted investment capital to anyone. What he alleges is that he paid fees under a proprietary trading arrangement, which is a different legal relationship (motion to dismiss, Doc. 19).

That argument has force independent of the litigation, and it is the same reasoning that explains why these programmes have not registered. A pool participant is exposed to the pool’s losses; an evaluation customer’s exposure is capped at the fee. A pool participant owns a fractional interest in the assets; an evaluation customer owns a contractual right to a payout if stated conditions are met. A pool participant’s return is a share of the pool’s performance; an evaluation customer’s return is calculated from their own account’s recorded performance and nobody else’s. If those distinctions hold on the facts of a given firm, the statutory definition is not satisfied.

One procedural point cuts against reading too much into either side’s papers. A motion to dismiss tests whether the complaint, taken at face value, states a legally sufficient claim. It does not weigh evidence and it does not decide what happened. A denial would mean only that the case proceeds; a grant would mean only that this complaint, as drafted, did not state a claim.

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What would change if the theory succeeded, and what might stop it

These are open questions, and we do not predict outcomes.

If a court accepted the theory on the facts of a particular firm, the consequence would be the application of an existing rule to a business that had assumed it sat outside — the operator inside a registration regime, with the disclosure, reporting and membership obligations that follow. How narrow such a holding would be is unknowable in advance: it might turn on that firm’s specific account architecture — one master account, real orders on a registered exchange, proportional allocation — or reach any arrangement in which fee income funds trading capital.

Reasons it might not succeed are equally concrete. The definitional argument above may simply be right on the statutory text. The factual predicate — that fees are aggregated into a common trading pot rather than being revenue — has to be proved firm by firm, and a firm whose funded phase is simulated with no real orders has a different set of facts from one routing real orders to an exchange. And one of the three suits is being prosecuted without counsel, which is a docket fact rather than a comment on its merits, but it does mean the theory has not yet been advanced by a well-resourced plaintiff or by a regulator.

There is also a separate reason not to read the filings as a forecast. Several US futures firms have been moving inside the CFTC perimeter voluntarily, without being required to. Topstep registered with the NFA as a Swap Firm and obtained approval as a Commodity Trading Advisor — filed in early April 2026, Swap Firm status recorded on 2 May 2026, held through Topstep Advisory LLC (TradeInformer, 19 May 2026). FTMO entered by acquiring OANDA, one of only four Retail Foreign Exchange Dealers registered with the NFA as of 2026 (Finance Magnates, 21 May 2026). The Topstep registration was filed less than two weeks after the suit against it. We state the sequence as recorded and draw no causal inference from it.

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A different enforcement route, which should not be confused with this one

On 29 June 2026 the CFTC issued and settled an order against Netrios LP Ltd. and Red Acre Ltd. for facilitating unlawful off-exchange leveraged retail commodity transactions with US customers who were not eligible contract participants. The penalties were $1.75 million and $750,000 respectively. The order describes Netrios as having sold a specialised service providing key functions used to offer and sell margined retail commodities through offshore off-exchange branded platforms that took on US customers without regard to eligible-contract-participant status, and Red Acre as having knowingly provided assistance in the form of customer support. The SEC settled parallel charges the same day (CFTC release 9263-26; SEC order).

Keep that route separate from the pool theory. It is a regulator, not a private plaintiff. Its target is infrastructure and service providers rather than the consumer-facing brand. Its legal basis is the off-exchange retail commodity transaction rules and customer eligibility, not commodity pool registration. And it was settled, producing an order by consent rather than a contested ruling.

Taken together with the counterparty theory in the earlier CFTC docket — set out in what the My Forex Funds outcome actually decided — three separate legal characterisations are now circulating in the United States, attaching to three different parts of the same business: who is the counterparty, what happens to the pooled money, and who supplies the infrastructure. They are not versions of one another.

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Where this stands

Three suits, two plaintiffs, no ruling on the merits. Nothing above should be read as a finding against Topstep, Apex Trader Funding, or any individual defendant, and all three cases remain pending as of 31 July 2026.

The theory attaches to aggregation rather than to the fee. Charging for an evaluation is not what is being challenged; combining the proceeds into common trading capital with proportional allocation is. The defence answer is a real one — no contributed capital, no interest in pooled assets, no share in the pool’s losses — and if those hold on the facts, the statutory definition is not met. Whichever way the motions to dismiss go, they test the pleading and not the facts, so neither ruling will settle the question.

The question left open is the one the pleadings raise and no court has reached: whether the capital behind a funded account is the firm’s own money, or an aggregate of the fees paid to reach it. That turns on each firm’s account architecture — whether the funded phase produces real orders on a real venue, which is examined in whether a funded account is a real account. What a buyer can enforce in the meantime does not wait on the answer, and is covered in what protections a challenge buyer has.

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Written by the upme.com research desk. Case names, courts, docket numbers and party positions above are taken from the filed documents linked in the front matter, and each case is described at its stage as of 31 July 2026. Pending litigation is reported as pending; we do not characterise defendants, and nothing here is a finding, a prediction, or legal 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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