Football Index has had its licence suspended by the Gambling Commission after appointing administrators.
The platform, which allows users to trade “shares” in high-profile footballers, suffered a market crash last weekend after reducing dividend payouts – one of the ways users can make money.
Football Index suspended trading on Thursday, when it announced it was working with insolvency firm Begbies Traynor on administration.
Users have been left unable to withdraw their investments, which have plummeted in value following the crash.
The Gambling Commission said it “had concerns activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.
“We have made it clear to the operator that as the investigation progresses, we expect it to focus on treating consumers fairly and keeping them fully informed of any developments which impact them.”
Football Index launched in 2015 as a stock market of footballers, where users can bet on the value of players rising or falling.
The company has been the shirt sponsor of two teams in English football’s second tier, Queens Park Rangers and Nottingham Forest. QPR said today that they would no longer display Football Index on their kits.
Last week’s crash came after Football Index reduced its maximum dividend from 14p per share to 3p. Player share prices nosedived as users sought to cash out.
What Football Index has said
Football Index said on Thursday night: “We fully understand and anticipate concerns regarding a temporary suspension of your ability to withdraw existing Cash Balances and assure you that they will remain held in a segregated account to be managed in conjunction with our advisors, protected by the trust arrangements that are in place and will be subject to review by the administrators.
“The Board have at all times been seeking the best way to sustain the platform as we believed a recovery was not only possible but also in the best interests of our customers.
“This decision is deeply regrettable, and is the outcome we were seeking to avoid by restructuring dividends.
“However, we believe it is the most responsible route forward for our community given the situation as it has developed.”