MyForexFunds was shut down by the CFTC and CIRO in August 2023 after being found to have operated fraudulently, affecting tens of thousands of funded traders globally. The scheme collected over $310 million from traders through challenge fees that regulators alleged were never intended to produce legitimate funded accounts.
What happened to MyForexFunds?
CFTC enforcement action 2023
In August 2023, the Commodity Futures Trading Commission (CFTC) and the Canadian Investment Regulatory Organization (CIRO) issued emergency orders against MyForexFunds, freezing the company's assets. According to the official CFTC complaint, co-founders Marin Aleksandrov and Plamen Velev allegedly ran a fraudulent operation: the challenges sold to traders were not genuine evaluations, and the collected funds were used for personal benefit.
Key figure
The CFTC complaint cites over 135,000 accounts opened by traders worldwide. A large proportion lost their challenge fees without ever receiving a payout.
Impact on funded traders
Traders who had successfully completed their challenge and held active funded accounts suddenly lost access to their balances. Withdrawal requests were frozen. The incident exposed a fundamental risk in unregulated prop firms: the complete absence of legal protections for client funds.
Why regulatory compliance matters
Unlike Forex brokers regulated by the FCA, ESMA, or CFTC, prop firms operate without a unified regulatory framework. This makes due diligence critical when selecting one. Factors to evaluate include the company's legal structure, the jurisdiction it operates from, and the consistency of verified payout reports from the trading community.
According to ESMA data on retail derivative products, between 74% and 89% of retail traders lose money on CFDs. Against this backdrop, choosing a prop firm that actually pays out is a high-stakes decision.
Criteria for safe prop firm alternatives
Regulatory status and jurisdiction
Look for prop firms registered in jurisdictions with enforceable legal recourse: European Union (Czech Republic, Cyprus, Hungary), Israel, or the United States for futures. The complete absence of an identifiable legal entity is a major red flag.
Track record of payouts
Search for independent proof of payouts on community forums such as Reddit (r/Forex, r/Daytrading), Trustpilot, and PropFirmMatch. Company age matters: a prop firm founded in 2015 or 2016 has survived multiple market cycles and demonstrated resilience. Consistent negative reviews about delayed or refused payouts are a serious warning signal.
Rules transparency and fair evaluation
The rules must be clearly defined and consistently enforced: maximum daily drawdown, trailing drawdown mechanics, profit target, minimum trading days, and news trading restrictions. For a deep dive into drawdown mechanics, see our guide on trailing drawdown in prop firms.
Top 5 prop firm alternatives to MyForexFunds in 2026
| Prop firm | Founded | Max funding | Profit split | Drawdown rules |
|---|---|---|---|---|
| FTMO | 2015 (Prague) | $400,000 | 90% | 10% total, 5% daily |
| The5ers | 2016 (Tel Aviv) | $4,000,000 | 100% | 4% total |
| E8 Funding | 2021 | $400,000 | 80% | 8% trailing |
| Topstep | 2012 (Chicago) | $150,000 | 90% | Futures only |
| For Traders | 2022 | $200,000 | 85% | 10% total, 5% daily |
FTMO: European leader
Founded in Prague in 2015, FTMO is the most established prop firm in Europe. With a reported track record of over EUR 50 million paid to funded traders, it sets the industry benchmark for credibility. The evaluation is rigorous but transparent: a 10% total drawdown cap, 5% daily limit, and profit targets of 10% in Phase 1 and 5% in Phase 2.
For a detailed FTMO challenge strategy, see our FTMO challenge strategy guide.
The5ers: long-term funding model
The5ers stands out for its aggressive scaling model: traders can reach up to $4 million in managed capital through progressive milestone increases. Founded in Tel Aviv in 2016, the firm offers a 100% profit split in the early phases, which is rare in the industry.
The 4% drawdown rule is stricter than most competitors, which rewards disciplined, conservative traders. For traders looking for a long-term partnership rather than a one-off challenge, this is a compelling option.
E8 Funding: flexible drawdown
E8 Funding uses a trailing drawdown calculated at 8% from the account's peak balance. This structure provides more flexibility than a fixed drawdown model, making it well-suited to swing trading strategies that require room to breathe between peaks.
The 80% profit split is slightly below market average, but the more forgiving rules compensate for some trading profiles. Traders who have failed FTMO due to intraday volatility often find E8 Funding's model a better fit.
Topstep: futures-focused
Topstep is a Chicago-based firm founded in 2012, specializing exclusively in futures contracts traded on CME. It is the only prop firm on this list operating under US regulatory frameworks for futures instruments, which provides a higher degree of structural security for traders in US-listed markets.
Maximum funding is $150,000 with a 90% profit split after the first withdrawal. The evaluation is simpler than most two-phase Forex challenges.
For Traders: fastest payouts
For Traders is the most recently founded firm on this list (2022) but has quickly built a reputation for some of the fastest payout processing times in the sector. The rules mirror the market standard: 10% total drawdown, 5% daily limit.
Selection tip
Before committing to a challenge fee, check the prop firm's legal registration (company address and business registration number), recent independent reviews, and verify that withdrawal terms have not changed since the reviews were written. A legitimate prop firm is transparent about its legal identity.
How to validate a prop firm before signing up
Red flags to watch
Several indicators should prompt caution before paying any challenge fee:
- No verifiable company address or business registration number
- Conditions that change after payment (drawdown clauses modified without notice)
- Aggressive social media promotions with unverifiable testimonials
- Patterns of delayed or contested withdrawals reported on community forums
- No accessible support channel beyond a chat widget
Community verification steps
The trading community provides robust resources for verifying prop firm reliability. Search the firm on Reddit (r/Forex, r/Daytrading), Trustpilot, and PropFirmMatch. Pay attention to the trend in reviews over time: a prop firm that begins accumulating negative reviews in a short period is a warning signal, even if earlier reviews were positive.
For a structured comparison of leading firms, see our detailed prop firm comparison: FTMO vs Topstep.
How to read the terms
Read the drawdown rules first. Understanding the difference between a static drawdown and a trailing drawdown is essential before committing. Our guide on trailing drawdown explained covers the mechanics in detail.
Also review trading restrictions carefully: some prop firms prohibit news trading, weekend holds, or crypto instruments. If your strategy depends on any of these, verify compatibility before paying.
Backtesting your strategy before a prop firm challenge
Why backtest before paying evaluation fees
The average pass rate on prop firm challenges is estimated at 5 to 15% across community surveys. The leading cause of failure is not lack of discipline: it is trading a strategy that has never been validated against historical data under the exact conditions of the target prop firm.
Backtesting a strategy lets you measure its mathematical expectancy, maximum real drawdown, and consistency across multiple years of data before risking evaluation fees that range from $100 to $600 depending on account size.
For a complete framework, see our guide on backtesting prop firm rules.
Using Backtrex to simulate prop firm rules
Backtrex is a visual no-code backtesting tool that lets you simulate your strategy against the exact constraints of a prop firm: maximum drawdown, profit target, and evaluation duration. No Pine Script or MQL coding required. You drag and drop logic blocks and run results across 5 to 10 years of historical data in under 30 seconds.
Prop firm tip
Before paying for your next challenge, configure the exact drawdown and profit target parameters of your target prop firm in Backtrex. If your strategy fails the backtest under those constraints, it will fail the live challenge too.
Backtrex pricing costs less than a single failed challenge. See how to pass a prop firm challenge with a structured method.
Important Risk Warning
Conclusion
The collapse of MyForexFunds was a turning point for the prop trading industry. In 2026, FTMO, The5ers, E8 Funding, Topstep, and For Traders offer serious alternatives backed by verifiable payout histories and identifiable legal structures. The key to success remains constant: validate your strategy against historical data under your target firm's exact rules before spending money on evaluation fees.
No. The CFTC and CIRO issued emergency orders against MyForexFunds in August 2023, freezing the company's assets. The co-founders were charged with running a fraudulent scheme worth over $310 million. The platform is no longer accessible, and affected traders' funds were seized by regulators.
FTMO (founded 2015, Prague), The5ers (founded 2016, Tel Aviv), and Topstep (founded 2012, Chicago, futures only) are generally considered the most reliable alternatives in 2026. All three have demonstrated multi-year payout track records and transparent legal structures, making them the benchmark for trustworthiness in the industry.
Use no-code backtesting tools like Backtrex to validate your strategy against the specific drawdown and profit target rules of your chosen prop firm before paying evaluation fees. You build your strategy with drag-and-drop blocks and run a full backtest on historical data in seconds, with no programming required.
Trailing drawdown is a maximum loss limit that follows your account's peak balance upward. For example, starting at $100,000 with an 8% trailing drawdown means your disqualification threshold rises from $92,000 to a higher level as your balance grows. It is more restrictive than a static drawdown but more representative of professional risk management standards.
Always verify: the company's legal address and business registration number, independent reviews on Trustpilot and Reddit, consistency between published rules and community-reported experiences, and disclosed payout timelines. A legitimate prop firm publishes all of this information transparently.
Yes, and it is strongly recommended. Backtesting your strategy under the exact constraints of the target prop firm helps you estimate your probability of passing before committing to evaluation fees. Backtrex lets you configure drawdown limits, profit targets, and evaluation duration to generate a complete performance report in minutes.
For beginners, The5ers offers a progressive growth model with strict rules that build discipline over time. FTMO provides the most comprehensive documentation and the largest community. See our dedicated guide on best prop firms for beginners for a profile-based comparison.