# A trader sued Topstep in federal court. What the complaint says, what Topstep argues, and where the case stands

> A trader sued Topstep in a Florida federal court in April 2026. What the complaint alleges, why Topstep wants arbitration, and where the case stands now.

- Source: https://setupbook.io/blog/topstep-lawsuit-explained
- Site: SetupBook
- Language: en
- Published: 2026-10-29
- Tags: news, prop firm, lawsuit
- tr: https://setupbook.io/tr/blog/topstep-davasi-mccrudden-v-topstepfunded-aciklama
- es: https://setupbook.io/es/blog/demanda-topstep-mccrudden-v-topstepfunded-explicada
- pt: https://setupbook.io/pt/blog/processo-contra-a-topstep-mccrudden-explicado
- id: https://setupbook.io/id/blog/gugatan-topstep-dijelaskan-mccrudden-v-topstepfunded
- vi: https://setupbook.io/vi/blog/vu-kien-topstep-mccrudden-v-topstepfunded-giai-thich
- de: https://setupbook.io/de/blog/topstep-klage-erklaert-mccrudden-gegen-topstepfunded
- fr: https://setupbook.io/fr/blog/proces-topstep-explique-mccrudden-v-topstepfunded
- ar: https://setupbook.io/ar/blog/topstep-lawsuit-explained

On 9 April 2026, a futures trader named Vincent McCrudden sued Topstep in a federal court in Jacksonville, Florida. Topstep is one of the best-known prop firms (companies that sell evaluation programmes and fund the traders who pass). He is representing himself. His complaint says that once a trader reaches live funding, Topstep tightens the rules, parks part of the profit in a "reserve", and in effect runs an unregistered commodity pool. Topstep's lawyers have asked the court to send the whole dispute to private arbitration instead.

No judge has decided who is right. As of the latest docket we could see, the court's only real ruling is that discovery (the stage where each side must hand over documents) waits until the arbitration question is settled. Even so, the complaint is a useful read for anyone with a funded account, because it lists, in plain numbers, the things traders complain about most.

Everything in the allegations below is what the plaintiff says. None of it is a court finding.

## Quick timeline

| Date | What happened | Where it is recorded |
|---|---|---|
| Dec 2025 | The plaintiff says he was moved to a live account of about $102,000 with tighter limits (allegation) | Complaint, doc. 1 |
| 16 Mar 2026 | The plaintiff says he signed Topstep's Live Funded Account Agreement | Complaint, doc. 1 |
| 23 Mar 2026 | He says he sent a demand letter to Topstep's chief legal officer (allegation) | Complaint, doc. 1 |
| 9 Apr 2026 | Complaint filed in the Middle District of Florida, case 3:26-cv-00816 | Docket |
| 30 Apr 2026 | The same plaintiff files a separate suit against Apex Trader Funding | Docket, doc. 12 |
| 8 Jun 2026 | Defendants move to compel arbitration, or in the alternative to dismiss | Docket, doc. 19 |
| 16 Jun 2026 | Amended complaint; two of the five executives are dropped; jury trial demanded | Docket, doc. 22 |
| 30 Jun 2026 | Defendants file a renewed motion to compel arbitration | Docket, doc. 26 |
| 13 Jul 2026 | The plaintiff files his opposition | Docket, doc. 28 |
| 6 Aug 2026 | Scheduling order sets a jury trial for the January 2028 term | Docket, doc. 37 |
| 10 Aug 2026 | Magistrate judge stays discovery until the arbitration motion is decided | Order, doc. 39 |
| 4 Sep 2026 | Defendants name a mediator; this is the last filing on the docket we could see | Docket, doc. 41 |

## What is the case, and who is in it?

The case is McCrudden v. Topstepfunded LLC, in the U.S. District Court for the Middle District of Florida, Jacksonville Division. District Judge Wendy W. Berger is in charge, and Magistrate Judge Laura Lothman Lambert handles the motions she refers.

The plaintiff is Vincent McCrudden, who says he has worked in financial services for 25 years. He files "pro se", which means he represents himself without a lawyer. The defendants are three Topstep companies (TopstepFunded LLC, Topstep LLC and TopstepTrader, LLC) and, after the amended complaint, three executives, including the chief executive. The complaint first named five executives. The firm Sidley Austin appears for the defendants.

We read the original complaint, the plaintiff's later filings and the court's order on CourtListener. We could not read the amended complaint or Topstep's own motions, because no text of them is available there. Where we describe Topstep's arguments, we say where the description comes from.

## What does the complaint allege?

The 18-page complaint asks the court for relief on nine counts. In short, it says the following.

**The rules change at the live stage.** The plaintiff says he passed Topstep's evaluation and took five payouts in a simulated funded account. Around December 2025, he says, he was moved to a live account of about $102,000. At that point, he says, the daily loss limit dropped from $4,500 to $2,000 and the maximum number of contracts from 15 to 3. He says this led to repeated liquidations and his balance falling below $40,000.

**A "reserve" holds back profit.** In a later round, he says, he passed a $150,000 evaluation, took two $5,000 payouts and was moved to live early. Instead of crediting about $38,000, he says, Topstep credited $10,000 and put $28,000 in a reserve. To free a quarter of it he would have needed about $9,000 of profit on the $10,000 account, and about $36,000 to free all of it. The complaint calls this a mathematical near-impossibility.

**The agreement gives Topstep wide discretion.** The complaint cites Topstep's Live Funded Account Agreement. According to the complaint, payouts need Topstep's approval at its sole discretion, the live trading rules can be changed at any time, and Topstep may share or sell traders' trading information. It also points to a clause that bars traders from making disparaging statements, and to a clause that sends disputes to arbitration with JAMS (a private arbitration company) in Wilmington, Delaware.

**The commodity pool theory.** A commodity pool is an enterprise that takes money from many people and trades futures with it. Whoever runs one generally has to register with the CFTC (the US futures regulator) as a commodity pool operator and join the NFA (the industry's self-regulator). The complaint says Topstep's live accounts are sub-accounts of one master account, funded in part by traders' fees, and that Topstep has no pool operator registration. It also describes the business as a "systematic and deceptive scheme" to collect fees and data.

**The other counts.** They include fraud under the Commodity Exchange Act, breach of contract, fraudulent inducement, a Florida consumer-protection claim, conversion (wrongfully holding someone else's property), unjust enrichment and breach of fiduciary duty.

The plaintiff asks for damages, including the $28,000 reserve and the fees he paid over three years, plus punitive damages. He also wants court orders that would make Topstep register as a pool operator or stop its practices. A later filing of his puts the amount in dispute at about $140,000.

The complaint also says he sent a demand letter on 23 March 2026, gave a five-business-day deadline, and told Topstep he would complain to the NFA and the CFTC. A later court filing of his says a whistleblower complaint went to the CFTC on 10 April 2026. We found no public CFTC action about Topstep.

## What Topstep says back

We found no press statement from Topstep about the case. Its position appears in court papers.

From the plaintiff's opposition brief and a trade-news summary of Topstep's reply brief, the defendants argue the following:

- The dispute belongs in arbitration, under the agreements the plaintiff signed.
- The individual executives are not subject to the court's jurisdiction, and the complaint does not state a valid claim.
- The evaluation and simulated funded accounts are simulated trading only, and live accounts use Topstep's own capital, so the programme is not a commodity pool.
- Fees paid by traders are not pooled capital, and live traders have no ownership in the master account.
- The plaintiff was not a "customer" under CFTC and NFA rules that would limit how arbitration can be used.

This is how those sources describe Topstep's briefs. We could not check the wording against the briefs themselves. The plaintiff's brief says that Topstep's renewed motion admits live trading was real trading. He says this weakens one of Topstep's own arguments. We could not read Topstep's reply brief of 3 August 2026, so we cannot say how it answers him.

## What has the court done so far?

Very little on the merits, which is normal at this stage.

The judge's office has handled housekeeping. A magistrate judge struck Topstep's first disclosure statement on 28 May 2026 because it did not identify the members of the LLCs, which matters for deciding whether a federal court has jurisdiction. The judge denied a request to file an over-long motion.

On 10 August 2026, Magistrate Judge Lambert granted Topstep's request to pause discovery. Her reasoning: the arbitration motion is aimed at the whole case, and discovery could cost both sides money that arbitration would make pointless. She also wrote that if the motion is denied, the plaintiff will get a full chance at discovery. The order does not say anything about whether his allegations are true.

On 6 August 2026 the court set a calendar that runs to a jury trial in the January 2028 term, with discovery ending in July 2027. Those dates only matter if the case stays in court. On 4 September 2026 the defendants named a mediator.

The motion to compel arbitration is, on the docket we saw, still undecided. The CourtListener copy of the docket was refreshed on 28 October 2026, and its last filing was dated 4 September 2026. Dockets copied this way can lag the real one, so check the official record if you need the current state.

## What could happen next?

There are three broad paths, and none is certain.

- The court grants the motion and sends the dispute to arbitration, where a private neutral decides it, usually with less public record.
- The court denies it, and the case goes into discovery under the existing calendar.
- The court dismisses some or all claims for another reason, possibly with permission to amend.

A settlement is possible at any point, and the court has already pushed the parties towards mediation.

The same plaintiff has also sued Apex Trader Funding in the same court, case 3:26-cv-01073, before the same judge. That case is outside this post.

## What traders can take from it

You do not need to follow the lawsuit to use the questions it raises.

- **Read the live-stage rules before you pay for the evaluation.** The complaint's central point is that the numbers at the funded stage differed from the numbers in the evaluation. Compare the [daily loss limit](https://setupbook.io/glossary/daily-loss-limit), the contract cap and any payout reserve at each stage, and read what the live agreement says about changing them.
- **Take dated copies.** Screenshot or save the rules page and the agreement on the day you sign. If a rule changes, you have a record of what applied when you paid.
- **Find the dispute clause.** Look for words such as arbitration, "chosen courts", governing law and class-action waiver. They decide where a disagreement would be heard, and who pays to start it.
- **Note who approves payouts.** If payouts are "in sole discretion", ask how the firm describes its payout process in its own help pages, and save that too.
- **Keep your own numbers.** A [trading journal](https://setupbook.io/blog/prop-firm-trading-journal) built from your own broker data, as SetupBook does, records your trades and daily results with timestamps. A dispute about what you traded then rests on your records, not on memory.
- **Remember what a complaint is.** A lawsuit shows what one side claims. The only thing that tells you who is right is a ruling or a judgment, and there is neither yet. For background on how these firms work, see [what a prop firm is](https://setupbook.io/blog/what-is-a-prop-firm).

## Frequently asked questions

### What does the lawsuit against Topstep say?

The plaintiff alleges that Topstep tightens trading limits when traders move to live accounts, holds back part of the profit in a reserve, and operates an unregistered commodity pool. He also brings claims for fraud, breach of contract and unfair trade practices. These are his allegations, which Topstep disputes in court papers.

### Has a court ruled that Topstep did anything wrong?

No. As of the docket we could see, there is no ruling on the merits. The only substantive order stays discovery while the court considers Topstep's request to send the case to arbitration.

### What is Topstep's response?

We found no press statement. In court, according to the plaintiff's brief and a news summary of Topstep's reply, Topstep argues the case belongs in arbitration. It also argues that its programme is not a commodity pool and that the claims against the executives should be dismissed.

### Will there be a trial?

The court's scheduling order sets a jury trial for the January 2028 term. That happens only if the case stays in court and survives the motions. If the court sends it to arbitration, there will be no jury trial in this court.

### What should I check in my own funded-account agreement?

Check how the rules can be changed, what happens to profits at each stage, who approves payouts, where disputes are heard and whether you can sue as a group. Keep a dated copy of each version you accept.

## Sources

- [Complaint, McCrudden v. Topstepfunded LLC, doc. 1, CourtListener](https://www.courtlistener.com/docket/73174132/1/mccrudden-v-topstepfunded-llc/): the 18-page original complaint filed 9 April 2026.
- [Docket, McCrudden v. Topstepfunded LLC, 3:26-cv-00816, CourtListener](https://www.courtlistener.com/docket/73174132/mccrudden-v-topstepfunded-llc/): the entries, dates, judges and calendar.
- [Order granting stay of discovery, doc. 39, 10 August 2026](https://www.courtlistener.com/docket/73174132/39/mccrudden-v-topstepfunded-llc/): the magistrate judge's order and reasoning.
- [Plaintiff's opposition to the renewed motion to compel arbitration, doc. 28](https://www.courtlistener.com/docket/73174132/28/mccrudden-v-topstepfunded-llc/): the plaintiff's description of the defendants' arguments.
- [Notice of pendency of other actions, doc. 12](https://www.courtlistener.com/docket/73174132/12/mccrudden-v-topstepfunded-llc/): the related Apex case and the CFTC complaint he says he filed.
- [Court stays discovery in McCrudden v. Topstep, news summary](https://www.helloweekends.com/news/court-stays-discovery-in-mccrudden-v-topstep-pending-arbitration-ruling): a trade-news summary of the defendants' reply brief and the stay.

*This post is based on public sources as of October 30, 2026. Found a mistake? Write to info@setupbook.io.*