Prop Firm Karma Closes As Founder Cites ‘Cheaters’ For Financial Problems
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A week after launching a new trading platform and important updates, Karma, a prop firm, suddenly stopped its operations. The founder, Eshan Balapatabendi, said he “meant well” but faced “problems” that made his business “unable to continue.”
Karma’s rise and decline in the market happened very quickly. Although it received positive feedback, the prop firm was active for just two months. A week ago, it was reported that the company had collaborated with Match-Trade Technologies to offer its users a new version of Match-Trader integrated with TradingView.
Karma Aims To Build A Reliable Business In The Proprietary Trading Industry
The firm had revealed five major updates that were either in progress or scheduled for the near future, deciding to halt operations even more unexpectedly. Balapatabendi stated on the official Discord channel that he founded Karma to create something transparent and lasting. Unfortunately, numerous obstacles made the firm unsustainable.
The Founder pointed to two primary factors that caused the firm to become unsustainable. He stated that the company initially depended on a promised tech solution from an unnamed provider, but it never came through. This delay resulted in about four months of ongoing expenses.
Secondly, after its debut, Karma found that its risk checks were not properly implemented. This mistake let traders who should have been rejected pass through both Phase 2 and Phase 1, including possible cheaters. Consequently, the company encountered solvency issues.
Balapatabendi said Karma failed to catch the cheaters in its system. This led to cash flow problems, leaving the company without liquidity.
Karma isn’t the only prop firm to announce a closure lately. In mid-July, Funded Engineer also reported its shutdown despite efforts at “strategic restructuring” to remain in the market.
Karma Faced Significant Challenges That Ultimately Led To Its Closure
Reportedly, external parties showed interest in buying Karma, but the founder turned them down. Now, efforts are being made to ensure payouts to traders who earned their profits fairly.
In recent months, several other firms have also stopped their operations. In May, True Forex Funds made the same decision as it tried to stabilize its finances, and in March, SI World left the market.
FunderPro reports that over 50 proprietary trading companies may have vanished from the market this year. The Chief Executive Officer and Co-Founder of FunderPro, Alex Zanutto, noted that the traditional prop trading model is inherently flawed and unsustainable.
Zanutto remarked that the industry’s problem lies in the ‘sell as much as you can’ approach, often paired with promises of easy money. He said trading demands 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 receive funding.
