The prop firm alleges that the regulator submitted an email containing “intentionally false information” to the court.

A small fact in a recent court filing from the Commodity Futures Trading Commission (CFTC) surprised the legal team at My Forex Funds. They claimed, based on this evidence, that the regulator knew it had misrepresented the payments in the original accusations against the CEO of the prop trading company, Murtaza Kazmi. The court subsequently altered the judgment to freeze the assets of the company and its CEO as a result of this misrepresentation.

According to a motion filed by the prop trading firm on Tuesday, the CFTC intentionally included inaccurate information in the initial exparte application for a statutory restraining order (STO).

Led by Quinn Emanuel Urquhart & Sullivan, LLP attorneys Rob Zink and Avi Perry, the defendants' legal team declared, "The Court should strongly condemn and discourage such behavior by a government agency." Furthermore, the prop trading company is requesting that the CFTC pay for half of the costs associated with receivership. Due to the defendants' use of fraudulent disclosures to get the STO, the defendants' attorney claims that the CFTC should pay half of the receivership costs.

The statement regarding tax payments is false:

My Forex Funds and its CEO were hit with fraud accusations by the CFTC on August 28. This resulted in a court order freezing the company's and the individual's assets. The charges alleged that the business had illegally transferred money to Kazmi's personal accounts.

The defendants' attorneys challenged the CFTC's findings in late September, claiming that the organization had "rashly misrepresented transfers to and from the defendants’ bank accounts prior to the issuance of the SRO." According to My Forex Funds, the transmission of CA$31.5 million to the Canadian tax authorities was particularly concerning.

After a recalculation, the judge confirmed the prop firm's findings in a later court ruling and freed Kazmi's assets, leaving only about $12 million blocked. Nonetheless, on a Prima Facie (first look) basis, the court accepted the CFTC's major fraud evidence against My Forex Funds and its CEO. The court denied the plea made by attorneys for My Forex Funds to drop the fraud accusations.

A representative of a Canadian regulatory body confirmed on August 17, before the initial lawsuit was filed, that the CA$31.5 million was, in fact, a payment made to the tax authorities, as shown by an email exhibit included in the CFTC's own court filing last week.

My Forex Funds Disputes with the Authorities:

MFF stated in the motion that "both the Court and the Defendants were under the mistaken impression, until the CFTC's most recent submission, that the CFTC only discovered the inaccuracies in Mr. Matthew Edelstein's, the investigator, declaration after the complaint and initial SRO application were filed."

The CFTC now acknowledges that 'the OSC emailed Mr. Edelstein shortly before filing the declaration, stating that the transfer consisted of tax payments', despite the fact that this detail was only mentioned in a footnote in the CFTC's filing (which is concerning and not in line with the expected standards of federal government counsel.

According to the defendant's motion filed in court, the email from the Canadian authorities was received by Ashley Burden, the CFTC's main counsel in the case and Senior Trial Attorney leading the complaint against the prop trading firm. The defendant's attorney said, "The CFTC knowingly presented a false declaration to the Court in support of an application to freeze all of the defendants' assets and to impose an expensive receivership on the defendants."