Just a week
after introducing a new trading platform and several significant updates, prop
firm Karma unexpectedly announced the cessation of its operations. Founder
Eshan Balapatabendi claims he “had good intentions” but encountered
“roadblocks” that made his business “unsustainable.”
Karma’s
rise and fall in the market was remarkably swift. Despite garnering positive
reviews, the prop firm existed for only two months. Finance Magnates
reported just a week ago that the company had partnered with Match-Trade
Technologies to provide its clients with a new version of Match-Trader
integrated with TradingView.
In
addition, the firm had announced five significant updates that were either
being implemented or planned for the near future. This makes the decision to
cease operations all the more surprising.
“I
started Karma to build something transparent and sustainable,”
Balapatabendi commented on the official Discord channel. “Unfortunately,
there were a lot of roadblocks in the way which has caused us to be
unsustainable.”
Another firm gone, @karmaproptrader…
Website no longer operating, Discord chats are closed.
Drop your thoughts in comments 👇 pic.twitter.com/MS4JViTegP
— TheTrustedProp (@TheTrustedProp) August 11, 2024
What led to
the firm’s unsustainability? According to the Founder, there were two main
reasons. The company initially relied on a promised tech solution from an
unnamed provider, which failed to materialize. This delay drained costs for
about four months.
Secondly,
after launching, Karma discovered that their risk checks were not implemented
correctly. This oversight allowed traders who should have been denied to pass
through Phase 1 and Phase 2, including potential cheaters. As a result, the
company faced solvency problems.
Eshan Balapatabendi, the Founder of Karma
“We
did not catch the cheaters that were on our system,” Balapatabendi added.
“This caused cashflow issues which has now left us with no
liquidity.”
This is not
the only prop firm that has announced a closure recently. In mid-July, Funded
Engineer reported its closure despite attempts at “strategic
restructuring” to stay in the market.
Allegedly,
external entities expressed interest in acquiring Karma, but the founder
declined. Currently, efforts are underway to ensure payouts to traders who
generated their profits legitimately.
“I
know people will hate me or think negatively. However, I truly did have good
intentions. Sorry to everyone involved. I wish everyone the best in their
trading journey ahead,” Balapatabendi concluded.
Why Prop Firms Are Closing
In recent
months, several other companies have also suspended their operations. In May,
True Forex Funds decided to take a similar step as it struggled to stabilize
its financial position, and in March, SI World exited the market.
According
to FunderPro, more than 50 proprietary trading firms might have disappeared
from the market this year alone. Alex
Zanutto, CEO and Co-Founder of FunderPro, points out that the traditional prop
trading model is fundamentally flawed and unsustainable.
Many
firms operate on a virtual trading system where:
- Funded
traders’ trades never reach the real market, generating no actual profits. - Firms can
potentially manipulate markets to make traders fail challenges. - Payouts
come solely from challenge purchase fees, not real trading profits.
“The issue
plaguing the industry is the ‘sell as much as you can’ approach, often coupled
with the promise of easy money. The reality is that trading requires hard work
and time to master, and not everyone will succeed. Just as not everyone can
qualify for the Olympics, not everyone is meant to be funded,” Zanutto
commented.
Just a week
after introducing a new trading platform and several significant updates, prop
firm Karma unexpectedly announced the cessation of its operations. Founder
Eshan Balapatabendi claims he “had good intentions” but encountered
“roadblocks” that made his business “unsustainable.”
Karma’s
rise and fall in the market was remarkably swift. Despite garnering positive
reviews, the prop firm existed for only two months. Finance Magnates
reported just a week ago that the company had partnered with Match-Trade
Technologies to provide its clients with a new version of Match-Trader
integrated with TradingView.
In
addition, the firm had announced five significant updates that were either
being implemented or planned for the near future. This makes the decision to
cease operations all the more surprising.
“I
started Karma to build something transparent and sustainable,”
Balapatabendi commented on the official Discord channel. “Unfortunately,
there were a lot of roadblocks in the way which has caused us to be
unsustainable.”
Another firm gone, @karmaproptrader…
Website no longer operating, Discord chats are closed.
Drop your thoughts in comments 👇 pic.twitter.com/MS4JViTegP
— TheTrustedProp (@TheTrustedProp) August 11, 2024
What led to
the firm’s unsustainability? According to the Founder, there were two main
reasons. The company initially relied on a promised tech solution from an
unnamed provider, which failed to materialize. This delay drained costs for
about four months.
Secondly,
after launching, Karma discovered that their risk checks were not implemented
correctly. This oversight allowed traders who should have been denied to pass
through Phase 1 and Phase 2, including potential cheaters. As a result, the
company faced solvency problems.
Eshan Balapatabendi, the Founder of Karma
“We
did not catch the cheaters that were on our system,” Balapatabendi added.
“This caused cashflow issues which has now left us with no
liquidity.”
This is not
the only prop firm that has announced a closure recently. In mid-July, Funded
Engineer reported its closure despite attempts at “strategic
restructuring” to stay in the market.
Allegedly,
external entities expressed interest in acquiring Karma, but the founder
declined. Currently, efforts are underway to ensure payouts to traders who
generated their profits legitimately.
“I
know people will hate me or think negatively. However, I truly did have good
intentions. Sorry to everyone involved. I wish everyone the best in their
trading journey ahead,” Balapatabendi concluded.
Why Prop Firms Are Closing
In recent
months, several other companies have also suspended their operations. In May,
True Forex Funds decided to take a similar step as it struggled to stabilize
its financial position, and in March, SI World exited the market.
According
to FunderPro, more than 50 proprietary trading firms might have disappeared
from the market this year alone. Alex
Zanutto, CEO and Co-Founder of FunderPro, points out that the traditional prop
trading model is fundamentally flawed and unsustainable.
Many
firms operate on a virtual trading system where:
- Funded
traders’ trades never reach the real market, generating no actual profits. - Firms can
potentially manipulate markets to make traders fail challenges. - Payouts
come solely from challenge purchase fees, not real trading profits.
“The issue
plaguing the industry is the ‘sell as much as you can’ approach, often coupled
with the promise of easy money. The reality is that trading requires hard work
and time to master, and not everyone will succeed. Just as not everyone can
qualify for the Olympics, not everyone is meant to be funded,” Zanutto
commented.
