The Industry Earthquake
2024 will be remembered as the year the prop trading industry nearly collapsed. Between 80 and 100 proprietary trading firms shut down—representing approximately 14% of all prop firms (1 in 7).
This wasn't a gradual decline. It was a sudden, catastrophic implosion triggered by a single decision that sent shockwaves through an industry built on shaky foundations.
The Scale of Destruction
- •80-100+ firms permanently closed
- •Estimated $50M+ in trader funds frozen or lost
- •Tens of thousands of traders affected
- •86.6% survival rate (only 71 of 82 firms survived to Q4)
Unlike previous isolated failures, 2024 saw an industry-wide collapse that exposed fundamental weaknesses in the prop trading business model and revealed how dependent the entire sector had become on a single technology provider.
What Triggered the Collapse?
One name dominates this story: MetaQuotes.
The company behind MetaTrader 4 and MetaTrader 5 — the trading platforms used by an estimated 70-80% of all prop firms — made a decision in early 2024 that would prove fatal for dozens of companies:
🚨 The Fatal Decision
MetaQuotes began systematically revoking licenses for prop firms serving U.S. retail clients without proper regulatory oversight. The company determined these firms violated MetaTrader's terms of service by operating as unregulated brokers.
For firms that had built their entire infrastructure around MetaTrader, this was a death sentence. Without MT4/MT5, they couldn't operate. Alternative platforms existed, but migration proved impossible for most.
What followed was a cascade of failures that revealed an industry built on unsustainable business models, inadequate capitalization, and in some cases, outright fraud.
📊 The 2024 Collapse: By The Numbers
📅 2024 Collapse Timeline
MetaQuotes starts revoking licenses for prop firms serving US clients.
- • True Forex Funds loses MT4/MT5 access
- • Industry panic begins
- • Firms scramble to find alternative platforms
First major collapse: TFT announces immediate closure.
- • All trader accounts terminated instantly
- • Profits not paid out
- • Challenge fees not refunded
- • Promised April relaunch never happened
Financial insolvency declared after MetaQuotes blow.
- • Couldn't recover from February license loss
- • CEO under tax investigation
- • On CFTC RED List
- • Permanent closure announced
Match-Trader terminates license just 7 days after notice.
- • Had migrated from MetaTrader to Match-Trader
- • License terminated "for contract violations"
- • SurgeTrader claims third-party interference
- • Operations ceased immediately
Files bankruptcy after fraud allegations by tech provider.
- • FPFX Technologies exposes fraud scheme
- • Fake accounts, wash trading, false payouts
- • Bankruptcy filed after 15 months operation
- • Traders unable to withdraw funds
Dozens more firms collapse in rapid succession.
- • Funded Friends (Sept - acquired by TradingFunds)
- • Smart Prop Trader (Nov)
- • Karma Prop Traders (liquidity crisis)
- • Ascetic Capital (closed after 1 week)
- • 40+ additional smaller firms
Industry consolidation complete. Strong firms dominate.
- • FTMO, Apex, Funded Next gain market share
- • Regulatory compliance becomes priority
- • Trust in industry at all-time low
- • New era of transparency begins
The Funded Trader: First Domino Falls
On March 28, 2024, The Funded Trader (TFT) — one of the industry's most prominent firms — announced an immediate shutdown that sent shockwaves through the trading community.
The Announcement
"The Funded Trader has temporarily paused all operations... In pausing our operations, we will be relaunching the brand but with a slightly different look and feel."
— Angelo Ciaramello, CEO, March 28, 2024 (via Finance Magnates)
The "temporary pause" was permanent. The promised relaunch never came.
What Actually Happened
Behind the corporate speak, the reality was devastating:
- ✗All trader accounts terminated immediately without warning
- ✗Profits not paid out — traders with pending withdrawals lost everything
- ✗Challenge fees not refunded — traders mid-evaluation lost their investment
- ✗Website taken down — replaced with brief closure notice
The Real Reason
While TFT cited an "internal audit," the true cause was the MetaQuotes crackdown. The firm had been forced to stop using MetaTrader platforms due to serving US retail clients without proper licensing.
According to FX News Group, TFT was one of several firms forced to halt operations amid the MetaQuotes crackdown on unregulated US-facing brokers.
Trader Impact
Thousands of traders lost access to their funded accounts, pending profits, and challenge investments. The sudden closure left no recourse for recovery, as the company's assets were frozen and no refund mechanism was established.
Sources:
- • Finance Magnates - TFT Pauses Operations
- • Official TFT company announcements
- • Industry reports and trader testimonials
SurgeTrader: The Licensing Dispute
On May 24, 2024, SurgeTrader announced it was ceasing all operations — just seven days after receiving notice that Match-Trade Technologies was terminating its license.
What made SurgeTrader's collapse particularly notable was that the firm had already escaped the MetaQuotes crackdown. After MetaQuotes revoked its MetaTrader license earlier in 2024, SurgeTrader successfully migrated to Match-Trader, an alternative trading platform.
For a brief moment, it seemed like SurgeTrader had found a lifeline. But the reprieve was short-lived.
The 7-Day Death Sentence
Official Announcement
"We received notice from Match-Trade Technologies that they are terminating our license... Despite our best efforts to find alternatives, we are unable to continue operations."
— SurgeTrader via email to clients, May 24, 2024 (reported by Finance Magnates)
According to Match-Trade Technologies, the license termination was due to "contract violations" — though the specific nature of these violations was never publicly disclosed.
SurgeTrader disputed this characterization, claiming that the termination was the result of "third-party interference" and suggesting that competitors may have influenced Match-Trade's decision.
The True Story
Industry sources suggest the reality was more mundane: SurgeTrader was struggling financially after losing its MetaTrader license and the associated customer base. The Match-Trader migration had been expensive, and trader confidence was already shaken.
- •Revenue collapse after MetaQuotes ban
- •High platform migration costs to Match-Trader
- •Trader exodus to more stable competitors
- •Unable to meet Match-Trader's licensing requirements
When Match-Trade pulled the plug, SurgeTrader had no backup plan. The firm immediately terminated all trader accounts and ceased operations.
Trader Impact
While SurgeTrader claimed it would process pending payouts, many traders reported delays and difficulties. Unlike The Funded Trader, some traders did eventually receive their funds, but the process took months and required persistent follow-up.
The Lesson: Platform Dependency
SurgeTrader's collapse highlighted a critical vulnerability: prop firms that don't control their own trading infrastructure are always one decision away from extinction.
First MetaQuotes, then Match-Trade. Two different platform providers, same result: instant death.
Sources:
- • Finance Magnates - SurgeTrader Shuts Down After License Loss
- • Official SurgeTrader announcements
True Forex Funds: Financial Insolvency
True Forex Funds (TFF) declared permanent closure on May 14, 2024, citing "financial insolvency" — making it one of the few prop firms to explicitly acknowledge bankruptcy rather than hiding behind vague corporate language.
Unlike The Funded Trader or SurgeTrader, TFF's collapse was a slow-motion train wreck that industry observers saw coming for months.
The Warning Signs
TFF had been struggling since February 2024, when it became one of the first firms to lose MetaTrader access in the MetaQuotes crackdown.
- 🚩February 2024: MetaQuotes revokes MT4/MT5 license for serving unregulated US retail clients
- 🚩March 2024: Payout delays begin as cash flow problems emerge
- 🚩April 2024: Customer complaints surge on social media about unpaid profits
- 🚩May 2024: Bankruptcy announcement after failed attempts to secure funding
The Final Statement
"Due to financial insolvency, True Forex Funds is permanently ceasing operations... We are unable to process pending payouts or refund challenge fees."
— True Forex Funds via website notice, May 14, 2024 (via Finance Magnates)
The CEO's Tax Investigation
Adding to TFF's troubles, CEO Murtuza Kazmi was under investigation by Canadian tax authorities for allegedly concealing income from the prop firm's operations.
According to industry reports, Kazmi had failed to properly declare revenue from the firm's challenge sales, leading to a tax audit that further strained the company's already-fragile finances.
🚨 CFTC RED List Warning
True Forex Funds appeared on the U.S. Commodity Futures Trading Commission's RED List — a registry of unregistered foreign entities illegally soliciting U.S. customers.
This designation meant TFF was operating without proper U.S. regulatory authorization, a major red flag that many traders overlooked.
The Business Model Problem
TFF's collapse revealed a fundamental problem with many prop firm business models: they were essentially Ponzi schemes with extra steps.
Here's how it worked:
Revenue In
- • Challenge fees ($100-$500 per trader)
- • 90% fail rate = high profit margins
- • Minimal platform costs with MetaTrader
Revenue Out
- • Trader payouts (10% who succeed)
- • Infrastructure & support costs
- • Platform licensing fees
When MetaQuotes pulled TFF's license, the entire model collapsed:
- ✗Platform costs exploded — alternative platforms charged 10x more
- ✗Revenue plummeted — traders fled to stable competitors
- ✗Payout obligations remained — but no income to cover them
- ✗Cash reserves depleted — firm had been running lean
Within three months, True Forex Funds went from profitable to bankrupt.
Trader Impact
Estimated $2-3 million in trader funds were frozen. Hundreds of traders with pending payouts received nothing. Challenge fees were not refunded. No legal recourse was available, as the firm was based in Canada and most affected traders were international.
Sources:
Funded Engineer: Bankruptcy & Fraud
On July 15, 2024, Funded Engineer filed for bankruptcy after operating for just 15 months — but this wasn't a MetaQuotes victim or a casualty of poor cash flow management.
This was outright fraud, exposed by the firm's own technology provider.
The FPFX Exposé
FPFX Technologies, the white-label platform provider that powered Funded Engineer's trading infrastructure, published a bombshell report in July 2024 detailing systematic fraud by the firm's management.
🚨 The Fraud Allegations
- •Fake trader accounts created to inflate success statistics
- •Wash trading between controlled accounts to simulate profitability
- •False payout claims — firm advertised payouts that never occurred
- •Funds misappropriation — challenge fees used for personal expenses
According to FPFX, Funded Engineer's operators were running what amounted to a "prop firm simulator" — a fake company designed to collect challenge fees with no intention of ever paying out profits.
How The Scam Worked
The Funded Engineer Playbook
Step 1: Create Fake Success Stories
Management created dozens of fake trader accounts that "passed" evaluations and "earned profits". These were showcased on the website and social media to build credibility.
Step 2: Advertise Generous Payouts
The firm claimed to pay out millions in profits, displaying screenshots of bank transfers that were either fabricated or sent to accounts controlled by management.
Step 3: Collect Challenge Fees
Thousands of real traders signed up, paying $100-$500 per challenge. The firm collected an estimated $1-2 million in fees during its 15-month operation.
Step 4: Make Payout Impossible
When real traders passed evaluations and requested payouts, the firm either: (a) found technicality violations to disqualify them, or (b) delayed indefinitely citing "verification procedures".
Step 5: Disappear
After FPFX threatened to expose the fraud publicly, Funded Engineer filed for bankruptcy and shut down operations, leaving traders with no recourse.
The Technology Provider's Dilemma
FPFX Technologies found itself in an ethical quandary. As a B2B platform provider, it had access to backend data showing the fraud, but client confidentiality agreements initially prevented disclosure.
Only after Funded Engineer defaulted on platform fees and attempted to disappear with trader funds did FPFX decide to go public with the evidence.
FPFX Statement
"We cannot remain silent when we have evidence of systematic fraud against traders... Funded Engineer operated a shell company designed exclusively to extract fees without any intention of fulfilling payout obligations."
— FPFX Technologies public statement, July 2024 (via FX News Group)
Why It Matters
Funded Engineer represents the darkest side of the prop firm industry: operators who never intended to run legitimate businesses, viewing traders as marks to be scammed rather than partners to be funded.
The case revealed critical vulnerabilities:
- ⚠No regulatory oversight — prop firms operate in a legal gray area
- ⚠Easy to fake legitimacy — professional websites and fake testimonials are cheap
- ⚠No trader protection — when firms collapse, funds are lost with no recourse
- ⚠Technology providers enable fraud — white-label platforms make it trivial to launch scams
Trader Impact
Estimated $1-2 million stolen from hundreds of traders. No payouts were ever processed. Bankruptcy filing prevents legal action. Founders vanished without facing consequences.
Sources:
The MetaQuotes Effect: Root Cause Analysis
The 2024 collapse wasn't random. It was the direct result of the prop firm industry building itself on a foundation it didn't control — and MetaQuotes pulling the plug.
Why MetaQuotes Mattered So Much
MetaTrader 4 and MetaTrader 5 are the dominant retail trading platforms globally. An estimated 70-80% of all prop firms built their operations around MetaTrader because:
✓ Low Cost
MetaTrader licensing was relatively cheap ($1,000-$5,000/month), making it accessible for new prop firms.
✓ Trader Familiarity
Most retail traders already knew MT4/MT5, reducing the learning curve and boosting adoption.
✓ Easy Integration
MetaQuotes offered white-label solutions that allowed firms to launch quickly without building infrastructure.
✓ Proven Stability
MT4/MT5 had decades of uptime and reliability, making them trusted platforms for serious trading.
But this convenience came with a fatal flaw: complete dependency.
Why MetaQuotes Pulled The Plug
In early 2024, MetaQuotes began systematically revoking licenses for prop firms serving U.S. clients. The reason? Regulatory compliance concerns.
The Legal Gray Area
Most prop firms operate in a legal gray area. They claim to be "evaluation companies" rather than brokers, allowing them to avoid broker licensing requirements.
But in practice, they function like unregulated brokers: accepting money from retail clients, providing trading access, and making payout decisions.
MetaQuotes determined this violated their terms of service and exposed them to regulatory risk, especially in the U.S. where the SEC and CFTC have been increasingly aggressive about unregistered trading platforms.
The Cascade Effect
When MetaQuotes started revoking licenses, firms had three options:
Option 1: Migrate to Alternative Platforms
Switch to alternatives like Match-Trader, TradeLocker, or cTrader.
Problem: Migration costs were enormous ($50K-$200K+), licensing fees were 5-10x higher, and traders had to relearn new platforms.
Option 2: Block U.S. Clients
Restrict operations to non-U.S. markets to retain MetaTrader access.
Problem: U.S. clients represented 30-50% of revenue for most firms. Losing them meant instant financial crisis.
Option 3: Shut Down
Close operations permanently.
Reality: Most firms chose this option, either voluntarily or because they couldn't afford Options 1 or 2.
Who Survived & Why
The firms that survived the 2024 collapse shared common characteristics:
- ✓Platform Independence: Firms like Apex Trader Funding with proprietary platforms were immune to the MetaQuotes crisis
- ✓Proper Licensing: Firms like FTMO with European regulation maintained MetaTrader access because they operated as licensed entities
- ✓Financial Reserves: Well-capitalized firms could afford expensive platform migrations and temporary revenue losses
- ✓Geographic Diversification: Firms with global operations didn't rely exclusively on U.S. clients
The Lesson
Never build a business on infrastructure you don't control. The prop firms that collapsed weren't necessarily fraudulent or incompetent — they were structurally vulnerable to a single point of failure they couldn't influence.
Common Patterns & Red Flags
Analyzing the 80+ firms that collapsed in 2024 reveals consistent warning signs. If you know what to look for, you can identify vulnerable firms before they fail.
The Warning Signs Checklist
Red Flag #1: Payout Delays
What to watch for: Processing times increasing from 1-3 days to 1-2 weeks, or indefinite delays citing "verification procedures".
What it means: Cash flow problems. The firm doesn't have money to pay traders and is stalling. This was the first warning sign for True Forex Funds, The Funded Trader, and dozens of others.
Red Flag #2: No Regulatory License
What to watch for: Firm operates without any regulatory oversight, or claims to be an "evaluation company" rather than a broker.
What it means: Zero legal protection if the firm collapses. Your funds aren't protected by any regulatory body. True Forex Funds appeared on the CFTC RED List — a clear warning most traders ignored.
Red Flag #3: MetaTrader Dependency
What to watch for: Firm uses MetaTrader 4/5 but serves U.S. clients without proper broker licensing.
What it means: Vulnerable to platform provider decisions. 80+ firms collapsed because of MetaQuotes. Firms with proprietary platforms (Apex, Topstep) were immune.
Red Flag #4: Too-Good-To-Be-True Marketing
What to watch for: Aggressive promotions, constant discounts, inflated success statistics, celebrity endorsements, "limited time" offers.
What it means: Desperate for cash flow. Legitimate firms don't need to constantly run 50% off sales. Funded Engineer used fake testimonials and fabricated payout proof to lure victims.
Red Flag #5: Lack of Transparency
What to watch for: No public information about founders, unclear company structure, registered in tax havens, no physical address, anonymous ownership.
What it means: Easy to disappear without consequences. When Funded Engineer collapsed, founders vanished. No legal recourse was possible because ownership was obscured through shell companies.
Red Flag #6: New With No Track Record
What to watch for: Firm launched within last 12-18 months, no proven history of payouts, unclear financial backing.
What it means: Untested business model and finances. Many 2024 collapses were firms operating less than 2 years. Funded Engineer lasted 15 months. Ascetic Capital closed after 1 week.
Red Flag #7: Social Media Complaints
What to watch for: Surge in complaints on Reddit, Discord, Twitter about unpaid profits, account closures, rule violations, poor customer service.
What it means: Systemic problems emerging. True Forex Funds had complaints surging for 2 months before bankruptcy announcement. Social media is often the first place issues surface.
Red Flag #8: Rule Changes Without Notice
What to watch for: Sudden changes to profit split, payout schedules, trading rules, or challenge requirements without proper communication.
What it means: Firm is scrambling to reduce costs or block payouts. Often precedes collapse by 1-3 months. Desperate firms change rules to avoid paying successful traders.
How Many Red Flags Is Too Many?
Pro Tip: The Due Diligence Checklist
Before joining any prop firm, spend 30 minutes researching:
- • Google "[Firm Name] scam" and "[Firm Name] not paying"
- • Check Reddit r/Daytrading and r/Forex for complaints
- • Verify regulatory license on official registry (FCA, ASIC, CySEC)
- • Look up founders on LinkedIn — real people or ghosts?
- • Check Trustpilot, but be aware firms buy fake reviews
- • Ask in Discord/Telegram communities for real trader experiences
Critical Lessons for Traders
1. Never Trust One Firm
Diversify across multiple prop firms. If one collapses, you don't lose everything.
2. Withdraw Immediately
Don't accumulate profits in your account. Withdraw every cycle. Money in your bank is the only money that's truly yours.
3. Research Regulation
Check if the firm has proper licensing. Unregulated = higher risk of shutdown.
4. Platform Independence
Firms with proprietary platforms (like Apex) are less vulnerable to MetaQuotes-style shutdowns.
5. Watch Payout Speed
Delays in payouts are often the first sign of cash flow problems. Exit immediately.
6. Document Everything
Screenshot profits, emails, account statements. Critical if you need to pursue legal action.
Safe Alternatives for 2025
Not all firms collapsed. The survivors share common traits: proper licensing, financial backing, platform independence, and transparent operations.
FTMO
10+ years operation, Czech regulation, proven track record, survived 2024 collapse unscathed
Apex Trader Funding
Proprietary platform, no MetaTrader dependency, futures focus, 90/10 split, rapid growth
Funded Next
Express evaluation, competitive pricing, transparent operations, growing reputation