Short answer: most prop firm closures come down to one of three causes — regulatory action, a business model where the math doesn't work (too many payouts relative to fee revenue), or firms that were marketing-first operations with no real risk management behind them. Finance Magnates estimated 80–100 prop firms shut down in 2024 alone, the biggest contraction the niche has seen. Last checked: October 2026.
The trigger: My Forex Funds, 2023
The modern wave of closures traces back to August 2023, when the CFTC charged My Forex Funds and its CEO with fraud and froze the firm's assets in the US and Canada. My Forex Funds had been one of the largest players in the space. Its sudden freeze — and the uncertainty it created about every other firm's exposure to similar risk — triggered a chain reaction across the industry.
In the aftermath, True Forex Funds, Surge Trader and Skilled Funded Traders all shut down. Some traders report partial or full payouts before closure; others describe pending requests that were never honored. (Separately, a US court dismissed the CFTC's case against My Forex Funds in 2025 over the agency's own conduct — not a ruling on the underlying merits — and the firm has since started returning previously frozen client funds. That reversal doesn't undo the closures it set off.)
The structural causes behind the wave
1. Regulatory pressure. Prop firms occupy a gray zone in several jurisdictions — not quite a broker, not quite an asset manager, selling something close to a trading-skill contest with a cash prize. Regulators in the US and Canada moved against the clearest case of alleged fraud first, but the scrutiny extended attention to the whole category.
2. Unsustainable unit economics. The entire model depends on most challenge-takers failing. If a firm sets targets too easy, or markets too aggressively with "everyone gets funded" promises, more traders pass than the fee revenue can sustainably pay out — especially once a cohort of funded traders scales their split over time. Firms that discounted aggressively to grow fast sometimes discovered their payout obligations outpaced their challenge-fee intake.
3. No real business behind the marketing. Several of the firms that shut down in 2024–2025 had thin operational infrastructure: no real company registration trail, founders who weren't publicly identifiable, and support that functioned well during the sales phase and disappeared at payout time. These are the same patterns described in how to spot a prop firm scam.
4. Platform and liquidity-provider risk. Some firms depend on broker or liquidity partnerships that can end abruptly, cutting off the firm's ability to run accounts at all, independent of trader behavior.
What survived — and why
Firms that predate the 2024 reset and are still operating include FTMO (2015), The5ers (2016), Earn2Trade, AudaCity Capital, FTUK, Lux Trading Firm, Finitive Funding and TradeDay — firms with longer operating histories, public rule books, and payout records built up over years rather than one fast promotional cycle. Longevity itself is one of the better legitimacy signals in this category precisely because the failure mode (running out of money to pay traders) tends to show up within the first year or two.
What this means if you're choosing a firm today
- A firm's age isn't proof of quality, but it is one real data point: a firm that has paid out consistently for 3+ years has survived the exact failure mode that killed 80–100 competitors.
- A newer firm isn't automatically risky either — but it means you're trusting pricing and rules discipline rather than a long payout record. Weigh that honestly.
- Watch for the specific red flags that preceded past closures: unrealistic pass rates, vague company information, and ID checks that only appear at withdrawal time. Full checklist: how to spot a prop firm scam.
WICK FUNDED's approach
WICK FUNDED is a simulated proprietary-trading firm launched in 2026 — after the 2024–2025 shakeout, which means it has no multi-year payout history to point to, and we say that plainly rather than imply otherwise. What we control instead: transparent, published rules (static drawdown, stated consistency rule, no hidden activation fees), non-refundable challenge fees disclosed up front, and a payout structure — bi-weekly, in USDC on Solana, from company funds, on simulated performance — that we describe accurately rather than as investment returns. Most participants do not pass, as in every firm in this category. More: how simulated prop trading works, is WICK FUNDED legit, /rules, /faq.
FAQ
How many prop firms have shut down total? Finance Magnates estimated 80–100 closures in 2024 alone; multiple third-party tracking sites list 80+ verified closures across 2020–2026, though exact counts vary by source and methodology.
Did My Forex Funds traders ever get paid? The firm's assets were frozen in 2023; the CFTC case was dismissed in 2025 over the agency's conduct, and the firm has begun returning previously frozen funds to traders with pending claims as of 2026 — a long and unusual resolution timeline.
Is a prop firm shutting down always fraud? No. Some closures are straightforward business failures (unsustainable payout math, lost broker partnerships) rather than intentional fraud — though the end result for traders with pending payouts can look similar either way.
Does a firm's age guarantee it won't shut down? No, but longevity through a known industry-wide stress period (like 2024–2025) is meaningful evidence the firm's business model and risk management work in practice, not just on paper.
What should I do if a prop firm I use seems to be struggling? Request a payout promptly rather than letting balance accumulate, and watch for warning signs like support delays, new ID requirements at withdrawal, or sudden rule changes — covered in how to spot a prop firm scam.
Simulated trading evaluation — no real funds are traded. Not financial advice.