Karma Prop Traders recently halted operations due to liquidity concerns.
Initially, the owner rejected acquisition offers but now indicates a deal might be close.
Karma Prop Traders recently announced its closure, with founder Eshan Balapatabendi citing “insurmountable challenges” that made the business “untenable.” However, just days later, new developments suggest the firm is in “advanced negotiations” with a “major prop firm” interested in acquiring Karma’s client base.
Change of Course: A Deal May Be on the Horizon
Karma Prop Traders launched only two months ago, quickly earning positive feedback. Before its unexpected shutdown, the firm had partnered with Match-Trade Technologies, offering traders a platform that integrated Match-Trader with TradingView.
The firm’s sudden liquidity crisis, which Balapatabendi attributed to “exploiters” taking advantage of flaws in the company’s challenge system, led to its closure. Initially, the founder dismissed takeover proposals, stating they were “not the right move.” Instead, he assured clients that all legitimate accounts would be refunded.
However, in a surprising turn of events, Balapatabendi later revealed that the company is now in discussions with another prop firm regarding a potential acquisition of Karma’s accounts.
An Update from Karma’s Founder
In a message on the firm’s official Discord channel, Balapatabendi shared: “KARMA is currently in advanced negotiations with a leading Prop Firm in the industry regarding a potential acquisition. The new entity values our transparency and sees significant potential in the community we’ve established.”
He further added, “If the negotiations are successful, all active KARMA accounts will be transferred to the acquiring company.”
A Wave of Prop Firm Closures
Karma’s difficulties are not isolated. In recent weeks, approximately 20 smaller prop trading firms have shut down, largely due to Eightcap’s decision to withdraw support for the MT4 and MT5 platforms, driven by licensing conflicts with MetaQuotes.
Finance Magnates recently reported on the closure of Indigo Trader Funding, which sought a strike-off in the UK, and Funds For Traders, which vanished from the market following Eightcap’s exit.
Meanwhile, Astra Capital Group is attempting to take advantage of this trend by offering to acquire any prop firm that closes down, although they demand a significant share of profits from the challenges these firms conduct.
A survey by PipFarm, another prop trading company, highlighted the risks involved, with most investors facing losses. The survey revealed that the average investor spends over $4,200 on challenges, with several hundred respondents collectively spending nearly $2 million.
