you're quite right, as other comments detail a/b desks but also foul play and such. take a look at fxcm for example, from biggest to banned in the US just like that. looking at the cftc site can be enlightening
The irony of that whole situation is that FXCM allegedly helped draft a bunch of the regulations as big companies are prone to do but the government took them, cranked them up to 11, and killed FXCM with them instead of just their would-be competitors.
i should say, retail fx trading is 100% garbage. there is absolutely no reason to do it. trading currency futures which are actually centralized, actually transparent and liquid, all while having drastically better market data and platform options make it a no brainer.
but sleezy advertising, low barrier to account creation, lower minimums, less stringent account verification and being able to fund on credit (lol) tends to make sure people who don't know yet what they're doing never get there