Karma Prop Traders announced its closure last week. Founder Eshan Balapatabendi claimed he encountered “roadblocks” that made his business “unsustainable.” However, days later, an update suggested the firm is in an “advanced stage of negotiations” with a “leading prop firm” prepared to take over Karma's client base.

The Acquisition Wasn't Supposed to Be the “Right Move,” But Something Has Changed

Karma entered the market just two months ago, initially garnering positive reviews. Shortly before its downfall, it partnered with Match-Trade Technologies, providing traders with Match-Trader integrated with TradingView.

Unexpectedly, the firm lost liquidity , which Balapatabendi attributed to “cheaters” exploiting loopholes in the company's challenges system. In the same statement, he suggested he had received numerous takeover proposals but didn't consider them “the right move.” Instead, he promised to refund all honest clients.

Mere days after this announcement, the narrative shifted dramatically. Karma's founder informed that his firm is negotiating with another prop firm considering taking over the defunct entity's accounts.

“KARMA is currently in an advanced stage of negotiations with a leading Prop Firm in the industry regarding a possible acquisition . The Company appreciates our transparency and sees huge benefits to the community we have built,” Balapatabendi commented on the firm's official Discord.

“Should the negotiations finalize as planned, all active accounts with KARMA would be transferred to the Acquiring Company,” he added.

Increasing Prop Firm Closures

Karma isn't the only prop firm facing recent troubles. Reportedly, 20 different smaller prop trading firms closed just last week due to Eightcap's decision to cease support for MT4 and MT5, triggered by licensing issues with MetaQuotes.

Last week, Finance Magnates reported that Indigo Trader Funding, which filed for UK strike-off, and Funds For Traders, left without trading platforms after Eightcap's exit, disappeared from the market.

Astra Capital Group is attempting to capitalize on the situation, ready to acquire any “prop firm that shuts down,” but expects a majority share in profits generated by these entities' challenges.

According to a survey by PipFarm, another prop trading firm, this is a risky game where most investors lose, but substantial money is at stake. The average investor allocates over $4,200 to challenges, and a group of several hundred respondents admitted to collectively spending nearly $2 million on them.