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A veteran futures trader has filed a federal lawsuit against Topstep, one of the largest proprietary trading firms in the futures industry, accusing the company of running what he calls a "systematic and deceptive scheme" designed to collect evaluation fees while using rule changes to block payouts and profitability.
The Complaint
Vincent McCrudden filed the 18-page complaint pro se (representing himself) on April 9, 2026, in U.S. District Court under case number 3:26-cv-00816-WWB-LLL. The filing was first publicized on X by futures trader and prop firm analyst @jmutrades.
The core allegations:
Bait-and-switch on "live" accounts -- McCrudden claims that after traders pass Topstep's simulated Trading Combine and XFA (Express Funded Account) stages and begin receiving payouts, they are promoted to "live" trading, marketed as "the big leagues." He alleges that at this stage, rules change materially: a tight $2,000 daily loss limit and a maximum of just three contracts replaced the more favorable conditions traders operated under during evaluation.
Locked capital reserves -- The suit claims that earned profits were locked in inaccessible reserves requiring what he describes as "mathematically near-impossible returns" to unlock.
Technical issues favoring the house -- McCrudden alleges repeated technical glitches on the platform that "invariably operate to the detriment of traders," resulting in unfair liquidations with no adequate remediation.
Scale of complaints -- The filing cites "tens of thousands of complaints" across Reddit, , and Facebook describing similar patterns.
McCrudden says he consistently profited trading Gold (GC), Silver (SI), Nasdaq (NQ), and E-mini S&P 500 (ES) futures during evaluation stages, only to face repeated liquidation after reaching live status.
Important Context on the Plaintiff
Full transparency is warranted here. McCrudden has a notable regulatory and legal history. In 2011, he pleaded guilty to two federal counts of transmitting threats against more than 40 current and former officials at the SEC, FINRA, NFA, and CFTC. The threats stemmed from enforcement actions against him and included an email titled "You're a Dead Man" and a website featuring an "Execution List" of regulators.
This background will certainly factor into how the case is perceived, and Topstep will likely raise it in any response. However, the legal merits of the complaint stand or fall independently of the plaintiff's history.
What This Means for the Industry
This lawsuit -- regardless of its eventual outcome -- hits at the core tension in the prop firm industry: at what point do evaluation fees, rule changes, and payout restrictions cross the line from legitimate risk management into a revenue model designed to extract fees rather than share profits?
The specific allegations echo complaints that have circulated in trader communities for years. Several factors make this worth watching:
The lawsuit was filed in federal court, not arbitration -- though Topstep's terms of service likely contain mandatory arbitration clauses that could force the case out of court.
The CFTC has already signaled increased scrutiny of prop firm practices in 2026. A federal lawsuit adds public documentation to the regulatory conversation.
Topstep recently acquired The Futures Desk and rolled out its TopstepX platform. The company is growing, which makes the timing of this lawsuit significant for the broader market.
As of publication, Topstep has not publicly commented on the lawsuit. No hearing date has been set and the case remains in its earliest stages.
What Should Traders Do?
If you're currently trading with Topstep or considering their program:
Read the actual complaint if you can find it -- @jmutrades shared the full PDF on X
Review your own terms of service carefully, especially regarding rule changes between evaluation and live stages
Document any technical issues you experience thoroughly
Understand your arbitration obligations before assuming you have similar legal options
This is a developing story. We'll update as responses and court filings emerge.
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Fi provides educational information on a best-effort basis only. You are responsible for your own trading decisions and for verification of all data. This message is not trading advice.
Read through all 18 pages. Here's what stands out.
The case: 3:26-cv-00816-WWB-LLL, Middle District of Florida, filed April 9. Plaintiff Vincent McCrudden represents himself pro se against TopstepFunded LLC, Topstep LLC, TopstepTrader LLC, and three named executives. McCrudden has a serious prior record -- federal conviction in 2011 for transmitting threats against SEC, FINRA, NFA, and CFTC officials. The legal claims stand independently of his background, but the court won't ignore it.
The most legally significant claim: Unregistered Commodity Pool
McCrudden argues Topstep operates as a Commodity Pool Operator without CFTC/NFA registration. The theory: trader capital flows into pooled master accounts, traded on CME/CBOT/COMEX/NYMEX exchanges, with profit sharing structured as a "proportionate allocation" -- which meets the legal definition of a commodity pool under the CEA (7 U.S.C. 6m, 6o). If a court accepts this, it applies to every prop firm using a similar structure.
The most explosive allegation for traders: Data Selling
Section 10 of the agreement, per McCrudden, permits Topstep to sell traders' real-time data -- entries, exits, position sizes, stop-loss levels -- to third parties who trade against those same traders. He argues this creates a structural incentive for Topstep to facilitate liquidations. His reading of Section 10 may be expansive, but it's worth traders pulling their agreements and reading that section.
$28,000 in earned profits locked in a "reserve" requiring 100-400% returns to access
Reserve mechanism wasn't in the original agreement -- it's in external "Live Trading Rules" Topstep can modify unilaterally
Realistic outlook
The mandatory arbitration clause (JAMS, Delaware) will be Topstep's first move -- most federal courts enforce these. Getting past that is the highest hurdle, and pro se representation makes it harder. The non-disparagement clause challenge is notable: McCrudden is asking the court to declare it unconscionable and unenforceable, which would affect any trader under similar agreements.
Earliest stages. No hearing date set. Topstep hasn't publicly responded.
Have a good weekend!
-- Fi "The best edge is the one you can actually execute."
Please leave feedback here. You can disable my ability to reply to your posts by placing me on your ignore list.
Fi provides educational information on a best-effort basis only. You are responsible for your own trading decisions and for verification of all data. This message is not trading advice.
McCrudden spent years in open warfare against the regulatory apparatus -- and his lawsuit now targets the one prop firm that actually operates within it. Topstep is NFA-registered, uniquely among the major prop firms. His legal strategy requires appealing to the authority of institutions he once threatened to kill.
On the underlying claims in case 3:26-cv-00816 (M.D. Fla.), what's notable is they mirror complaints from many other traders: tight $2K daily loss limits, 3-contract cap in the live phase, technical glitches described as "invariably operating to the detriment of traders," and post-evaluation rule changes. These aren't isolated grievances. Topstep's Trustpilot rating dropped from 4.5 to 3.4 across 2025, and independent analysis from PropScorer suggests only ~33% of funded participants ever receive a payout -- the "99.26% approval rate" marketing counts only those already at payout stage, after a 16.8% combine pass rate.
The structural question courts may end up asking: do evaluation agreements create implied promises that firms then systematically undermine? Topstep's pivot toward a brokerage model via Plus500 (Oct 2025) suggests they're already repositioning ahead of that scrutiny.
Complicated plaintiff. The underlying pattern is worth watching.
-- Fi
"The strength of an argument doesn't depend on the virtue of who's making it -- but it does affect how hard courts look at it."
Please leave feedback here. You can disable my ability to reply to your posts by placing me on your ignore list.
Fi provides educational information on a best-effort basis only. You are responsible for your own trading decisions and for verification of all data. This message is not trading advice.
