The Prop Trading Industry's 2024 Reckoning: Why 80+ Firms Vanished

Between February 2024 and late 2025, the proprietary trading firm industry experienced its most devastating collapse in history. Approximately 80-100 prop firms ceased operations, representing 13-14% of all global operators, triggered by MetaQuotes' sudden platform crackdown, intensifying regulatory scrutiny, and fundamental business model vulnerabilities.

The crisis exposed an industry built on unsustainable economics: only 7% of traders ever receive payouts, while firms depended almost entirely on challenge fee revenue from the 93% who fail. The survivors—led by FTMO's $250 million OANDA acquisition—are now consolidating around broker-backed models and alternative platforms, marking a structural transformation of the entire sector.

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MetaQuotes Pulled the Trigger on February's Collapse

The industry implosion began on February 2, 2024, when MetaQuotes terminated True Forex Funds' MT4/MT5 licenses without warning. Within weeks, the Cyprus-based platform developer systematically revoked access from dozens of prop firms, citing grey-label license abuse, US regulatory exposure, and demo server arrangements that generated zero licensing revenue for MetaQuotes.

The crackdown's technical mechanism was devastating. Brokers like Blackbull Markets were forced to immediately terminate prop firm clients or lose their own MetaTrader licenses. Eightcap announced it would cease all prop firm services by February 29, 2024. An internal email from MetaQuotes stated platforms serving US clients needed FINRA or NFA regulation—a requirement virtually no prop firm could meet.

The beneficiaries were alternative platforms: Match-Trader onboarded nearly 60 prop firms and captured 60% of the top 10 operators. DXtrade, cTrader, and TradeLocker similarly expanded as firms scrambled for technological lifelines. However, for firms like True Forex Funds that couldn't survive the three-month migration period with frozen accounts and no new revenue, the platform switch came too late.

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The Casualty List Reveals Systemic Fragility

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The 7% Payout Reality Exposes the Business Model

The most damning industry statistic comes from FPFX Technology data covering 300,000 accounts across 10 prop firms: only 7% of all traders ever receive payouts.

The math: 14% pass challenges, but only 45% of funded traders achieve withdrawals. Average payout amounts to just 4% of funded account value—meaning a $100,000 funded account typically yields $4,000 payouts.

The economics favor firms structurally. A firm charging $150 for $50,000 challenges with 10,000 monthly applicants generates $1.5 million in fee revenue. If 8% pass (800 traders) and 20% of those receive payouts (160 traders), total payout obligations might reach $500,000-$800,000—leaving $700,000-$1 million monthly profit even while paying traders.

This model creates inherent conflicts of interest: firms profit when traders fail challenges and when funded traders violate rules or blow accounts. 60-70% of funded traders lose accounts within three months due to rule violations—a feature, not a bug, of the business model.

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Regulators Worldwide Converged on the Industry

European Warnings Intensified

• Belgium's FSMA (March 2024): First major EU regulator to warn, describing prop firms as "shadow investment games" where consumers "play on demo accounts"
• Italy's Consob (July 2024): Called prop trading "finance video games aimed at passing skill tests"
• Czech National Bank: Stated prop trading services "may be subject to the MiFID regulatory framework"—significant given FTMO's Czech domicile

FCA Pursued Criminal Prosecutions

The UK's Financial Conduct Authority charged nine individuals in May 2024 with promoting an unauthorized forex trading scheme, including Love Island and TOWIE reality TV personalities with combined Instagram followings of 4.5 million. Trials are scheduled for February-March 2027.

By June 2025, the FCA coordinated international action across six countries resulting in three UK arrests, 650+ social media takedown requests, and 50+ website shutdowns.

CFTC's Mixed Record

Beyond the collapsed MyForexFunds case, the CFTC added True Forex Funds to its RED List in June 2023—the first prop firm specifically designated. The RED List now contains over 240 entities. The agency's FY 2024 enforcement yielded record $17.2 billion in monetary relief, though primarily from crypto cases (FTX/Alameda: $12.7 billion; Binance: $2.7 billion).

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Structural Vulnerabilities Made Collapse Inevitable

• Platform dependency: Single broker or platform relationships created fatal single points of failure. When MetaQuotes or Eightcap withdrew support, firms with no alternatives collapsed immediately.
• Challenge fee addiction: Revenue concentrated in challenge fees (85-95% failure rate) rather than sustainable trading operations meant any disruption to new customer acquisition proved fatal.
• Regulatory arbitrage exhaustion: Operating in jurisdictional grey zones between investment services and gaming worked until regulators decided it didn't.
• Opacity as business model: Hidden payout denial rates, undisclosed success statistics, and unclear execution practices created reputational fragility.
• Liquidity fiction: Many firms operated entirely on demo servers while representing to traders they accessed real markets.

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Survivors Consolidate Around Regulated Models

The crisis produced clear winners. FTMO emerged dominant, posting $329 million revenue in 2024 (53% YoY growth) and $62.5 million net profit. The Czech firm secured a $250 million credit line from a UniCredit-led bank syndicate and completed its acquisition of OANDA on December 1, 2025—bringing regulated entities across New York, London, Singapore, and Tokyo under FTMO ownership.

Broker-backed prop firms now represent the sustainable model:

• IC Funded (IC Markets backing)
• ThinkCapital (ThinkMarkets)
• Blueberry Funded (Blueberry Markets) — paid $2.3 million to traders in first year
• Hantec Trader (Hantec Markets)
• Axi Select

The Prop Association (TPA) formed in April 2025 as an industry self-regulatory body—signaling surviving firms' interest in establishing standards before regulators impose them.

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Dubai Emerged as the Industry's New Center of Gravity

UAE now ranks third globally for prop firm headquarters, behind only the United States. Key attractions include:

• Zero personal income tax
• 100% foreign ownership since 2021
• Favorable timezone for serving Europe and Asia
• Virtual Assets Regulatory Authority oversight

FundedNext established operations in Ajman, while multiple European firms relocated headquarters to Dubai following the MetaQuotes crisis. The jurisdiction offers distance from both US CFTC reach and EU MiFID requirements.

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December 2025 Outlook Suggests Further Consolidation

The industry enters 2026 transformed. MetaTrader remains dominant in broader retail trading, but alternative platforms have permanently captured prop firm market share. FTMO's OANDA acquisition enables it to offer MT5 to US traders—unique capability following MetaQuotes' withdrawal from the US-facing prop market.

Outstanding risks remain:

• European regulators continue weighing MiFID classification that would require prop firms to hold investment firm licenses
• The 90% profit splits common in the industry require nine times normal trading volume compared to traditional 10-20% models—mathematics that may prove unsustainable
• ProjectX (associated with Topstep) stopped providing services to third-party prop platforms in late 2025, potentially signaling further consolidation in futures prop trading

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Conclusion

The prop trading industry's 2024-2025 collapse was not a series of isolated failures but a structural correction. An industry built on 93% trader failure rates, platform dependencies, and regulatory arbitrage encountered coordinated pressure from MetaQuotes, European regulators, and market forces simultaneously.

The 80+ firm closures eliminated primarily those operating on the thinnest margins with the weakest technological and regulatory foundations.

The survivors—broker-backed firms, FTMO with its OANDA acquisition, and operators who successfully migrated platforms—are building an industry less dependent on challenge fee gambling and more integrated with regulated brokerage infrastructure. Whether this evolution produces genuinely sustainable prop trading or merely postpones the next crisis depends on whether the new models can deliver real value to the 93% of traders who currently subsidize the 7% who succeed.

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This analysis is provided for informational purposes only. VeritasChain Standards Organization (VSO) develops cryptographic audit standards that could help address the transparency challenges highlighted in this article. VCP provides tamper-evident audit trails that make payout statistics, execution quality, and operational practices independently verifiable.

"Verify, Don't Trust"