Thousands of Football Index traders have been left furious after a change to the site’s terms and conditions triggered a major market crash on Saturday morning which has trapped their money in the exchange.
The Observer reported in January that Football Index, the self-styled “stock market of football”, suffered a series of price crashes on its exchange – where users can buy and sell “shares” in footballers and receive “dividends” based on their performance.
And after the company gave its users 28 days’ notice of a dramatic reduction in dividend payments, which has seen the maximum dividend payable reduced from 14p per share to just 3p per share, reports have emerged of another crash over the weekend.
Trading in shares was suspended until Saturday morning, when the price at which most shares in the index’s top 200 players could be sold divided to 1p or 2p – with no sell price at all for many more.
It is believed liquidity in the market has also disappeared, with a huge gap between the “buy” and “sell” prices of shares now evident, making it effectively impossible for users to retrieve any money from the exchange.
Manchester United’s Bruno Fernandes, who is one of the most popular players on the exchange, could be purchased for £1.54 on Saturday evening, down from £7.20 on Friday evening. He can now be sold for just £1.08.
Football Index’s new dividend structure was met with a mixture of anger and despair by its users when it was announced on Twitter on Friday night.
Individual users are alleged to have as much as £250,000 invested in the exchange, while some have already reported potential losses of up to £32,000 if the site was to go out of business.
A Football Index spokesperson told Daily Star Sport: “As mentioned in our address to our customers, reducing and restructuring our dividends was a difficult decision that was ultimately taken with a view to ensuring the long-term sustainability of the platform.
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“As we have previously outlined, yields had become unsustainably high compared to the level of activity on the platform, which has made this decision an unfortunate but necessary one.
“Every decision that we make with regards to changes to the platform is made with the express goal of providing a sustainable level of growth in terms of customers and the value of bets made in that period, and this was no exception.”
Football Index’s terms state that “in the unlikely event of insolvency”, steps have been taken to protect “any cash balance held by an account” but “there is no guarantee that all funds will be repaid”.
Money spent on shares “is not stored in any account or otherwise protected as they are sums at risk”, and since the business model means there is little incentive to leave a significant cash balance on an account, all but a fraction of net deposits on the exchange are unprotected.
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