The lawyers for My Forex Funds have filed a court move to penalize the regulator for allegedly falsifying information. After filing fraud allegations against My Forex Funds in August of last year, the CFTC shut down the prop trading business.

The Commodities Futures Trading Commission (CFTC) is facing penalties from the lawyers for Traders Global Group, also known as My Forex Funds. They claimed in a motion they filed on Thursday that the regulatory body's employees acted unethically and that it purposefully misrepresented facts.

The application filed in a New Jersey court said, "Knowing that sanctions are an extraordinary measure, they are required in this case to denounce and rectify the CFTC's severe misuse of the ex-parte process and its power as a government enforcement agency." The motion requests an "evidentiary hearing to fully comprehend and address the CFTC's recurring misconduct and its impact on the defendants’ rights" as part of the sanctions, "at the very least."

The request, which is a component of the ongoing legal action against My Forex Funds and its CEO, Murtuza Kazmi, bases the sanctions on the regulator's purported misrepresentation against Debt box.

Most of the accusations are based on earlier allegations that the CFTC filed a fraud lawsuit against My Forex Funds and its CEO by purposefully misrepresenting some tax payments. All of My Forex Funds' and Kazmi's assets were placed under freeze as a result of the regulator obtaining a statutory restraining order in response to these purported misrepresentations. 

The majority of Kazmi's assets were later unfrozen by a court, nevertheless. The motion said, "The CFTC inflicted irreparable damage on the defendants, instantly destroying a business that took years to establish and leaving Mr. Kazmi's family without substantial support for several months by fabricating a false reason for a complete asset freeze and receivership."

"False statements to the Court are not the only instance of the CFTC's dishonesty. Additionally, the CFTC made an improper attempt to violate Mr. Kazmi's attorney-client privilege. According to the motion, the CFTC "repeatedly deceived the court" regarding when it learned that the statutory restraining order was false during the preliminary injunction hearing. 

At the end of August last year, the CFTC first brought fraud accusations against My Forex Funds and its CEO. The CFTC claims that My Forex Funds' prop trading operation brought in at least $310 million in fees. Over 135,000 users have enrolled on the platform since November 2021. But the business was forced to close down right away as a result of the regulatory action.

The motion went on to say, "When viewed in its entirety, the undisputed evidence reveals a pattern of misconduct and a violation of the defendants' rights." "The CFTC has not yet taken significant action to undo the harm to the defendants, let alone acknowledged that its false statements were significant or that its staff acted in bad faith." "In this case, sanctions are necessary to deliver that message and undo the harm the CFTC caused."