Forex prop trading firms face crisis as Deel halts payouts

The forex prop trading sector was plunged into further uncertainty this week as HR startup Deel announced it has halted payouts to prop firms amid an ongoing investigation. The move follows revelations that Deel processed over $72 million in payments on behalf of MyForexFunds before the firm was charged with fraud by the CFTC last week.

Industry insiders say Deel’s decision stems directly from scrutiny by the CFTC into its role in facilitating payments for MyForexFunds. According to sources, Deel made over 40,000 transactions to transfer funds to MyForexFunds and served nearly 16,000 of its customers.

“This is a very small activity for us, less than 1 percent,” an anonymous Deel executive told Calcalist last week. “We didn’t know it was a problematic industry, and all the tests we conducted for them were normal. When we were informed that it is a problematic industry, we immediately ceased working with it.”

The halting of payouts by Deel has left many prop firms scrambling, with some warning of an impending existential crisis. “This is going to be an absolute disaster for the industry,” said Lewis Kaler, CEO of prop trading firm Bespoke Funding. “Without payouts, firms will start to collapse. Traders will jump ship. It could undermine trust in the whole sector.”

Some analysts say the shakeup may ultimately strengthen the prop trading industry by removing “bad actors” like MyForexFunds. But for now, uncertainty reigns. With over 15,000 traders impacted by the halted payouts, many small firms may not survive the turbulence. Industry leaders are calling for increased oversight to weed out unethical operations.

Whatever the outcome, the events of this week mark a dramatic new chapter for the world of forex prop trading firms. And the ripple effects may be felt for some time to come.