Investment platform Football Index collapsed into administration last week after slashing shares by more than 80%, triggering instant losses for tens of thousands of football fans.
In the past seven days, some savers have lost mortgage deposits and retirement funds, after the firm's decision to cut dividends wiped £90million off shares in seconds.
Customers expressed anger and disbelief at the collapse and said they felt betrayed, with some reporting that they had lost more than £100,000.
Campaigners accused the Gambling Commission of being "asleep at the wheel".
While Football Index is reported to have more than half a million registered users, only about 30,000 are thought to be regular traders, suggesting average losses of nearly £3,000 each.
The firm has since had its gambling licence suspended with people unable to access their money.
Have you been affected by the collapse of Football Index? Get in touch: emma.munbodh@mirror.co.uk
Football Index is a betting platform that mimics the stock market by allowing "traders" to buy and sell "shares" in football players.
Last Thursday it announced a decision to reduce "dividends", the payouts "traders" get when footballers they have "shares" in perform well, by about 80%.
At the time, Football Index said the decision was made because the parent company Bet Index Ltd had "sustained substantial losses" - but it led to a severe crash in the market with customers' profits wiped out within 24 hours.
A day later, the company announced in had entered administration and the Gambling Commission announced it had suspended Football Index entirely.
"We are pursuing a restructuring arrangement to be agreed with our stakeholders including, most importantly, our community," the company said.
"We are preparing this through an administration with insolvency practitioners Begbies Traynor, to seek the best outcome for customers with the goal of continuing the platform in a restructured form.
"Until such time as the administrators are in office, the platform will remain suspended and no trading or payment transactions, such as deposits and withdrawals, will be possible.
"Once in office, the administrators will be in contact with customers, creditors, and other stakeholders. This interim step of suspending the platform is merely to ensure that everyone's rights are preserved in relation to funds held by BetIndex Limited."
What is Football Index and how does it work?
Football Index is a betting platform that uses the stock market model to allow sports fans to invest in players.
It was set up in 2015, inviting willing members of the public to buy imaginary "shares" in footballers with rewards – in the form of "dividends" – paid out based on player performance in real time.
The firm makes money by "minting" shares and charging a 2% commission on buying and selling on its platform. It has around half a million registered 'traders' – many of whom are ordinary members of the public.
But last week the firm shocked investors with the decision to slash shares per player by 82%. The move sent everyone’s investments crashing.
It said from April 4, the amount customers would be paid per day would also be capped at just 6p, instead of 33p.
To put this into perspective, the price of Bruno Fernandes, the Manchester United midfielder, fell from £5.62 to £1.10.
Football Index justified the move by referring to its small print. It said the firm reserves the right to make "adverse changes" to dividends with 30 days’ notice and said it was necessary "to ensure the long-term sustainability of the platform".
But thousands of people saw their profits wiped overnight.
One trader told The Mirror his shares - worth £23,000 a fortnight ago - disappeared in just 24 hours. It's now possible he will lose his entire deposit in the firm.
Reports suggest punters stand to lose up to £100million from its collapse.
Can I withdraw my cash?
The company said money is currently being held in a "segregated account" but it is unclear when customers will be able to withdraw their cash.
The company's official statement said administrators will be in contact with people owed money.
"Once in office, the administrators will be in contact with customers, creditors, and other stakeholders," a statement said.
"This interim step of suspending the platform is merely to ensure that everyone's rights are preserved in relation to funds held by BetIndex Limited."
Can I still invest?
No. Football Index has confirmed that trading and payment transactions, including deposits and withdrawals, have all been placed on hold with its gambling licence now suspended.
Its licence in Jersey is also set to enter administration on Thursday.
A statement from the company's board read: "The Board of BetIndex Limited has consulted with external legal and financial advisors, and the UK and Jersey Gambling Commissions. The decision has been made to suspend the platform."
"Extremely excited about our 2021 plans"
Until last week, Football Index had sold itself as an incredibly successful platform - one that could generate highly lucrative returns for dedicated football fans.
In November, the company issued a statement saying it had "never been in a stronger financial position" and in January, Mike Bohan, its chief executive, stated that he was "extremely excited about our 2021 plans".
Days before the company announced the cut in dividend it also "minted" new shares of players, in effect inviting customers to buy more stakes at values that would soon collapse.
Customers said these statements gave them confidence to buy more shares in players, savings they have now lost.
Since the announcement, the company has come under huge scrutiny.
Matt Zarb-Cousin, of the Campaign for Fairer Gambling compared it to that of a ponzi scheme.
"To pay out dividends, it required more customers to deposit money. When that dried up, the problems started", he said.
"Football Index is an unsustainable business model. They created a stock market out of assets they themselves created. The football players on the market had no underlying value."
Will it survive this?
The company said that its aim is to "continue the platform in a restructured form".
However, the withdrawal of its betting licence and the investigation by the Gambling Commission suggests a potential revival is now unlikely.
Gambling campaigners say the company's collapse highlights the deficiencies of gambling regulations. They argue that in the case of Football Index, the buying and selling of shares in players was unregulated or should have come under the supervision of the Financial Conduct Authority regulator.
Matt Zarb-Cousin of the Clean Up Gambling campaign, said: "If the remote general betting licence Football Index were trading off covered their main product, then it should never have been licensed by the Gambling Commission as clearly this business model is unsustainable.
"But if their main product didn’t fall under the jurisdiction of the Gambling Commission, then it was an unregulated form of betting. This constitutes illegal gambling, and so action should have been taken to close it down. The regulator is culpable either way.
"Both the Gambling Commission and DCMS [Department for Digital, Culture, Media and Sport] have been asleep at the wheel. There are now very serious questions to answer about why this product was licensed in the first place, and why they did not respond earlier to warnings."
