A group of more than 40 British MPs have demanded a public inquiry into Football Index, Footstock and the conduct of the UK Gambling Commission (UKGC) on already bankrupt companies.
In a letter to Prime Minister Boris Johnson, members of the All Party Parliamentary Gambling Harm Group (APPG) criticized the failure to address issues identified by the Football Index in documents seen by the regulator back in January 2020.
“According to the evidence, it appears that the Gambling Commission licensed what became a pyramid scheme, was subsequently warned that it had become a pyramid scheme, but inadvertently or intentionally allowed Football Index to inflate its financial position by persuading its users to attract more investment and new money into the platform,” the letter says.
The letter emphasizes that the subsequent four-month delay in launching an investigation into the Football Index is evidence of potential negligence on the part of the UKGC.
He also claims that regulators were warned that by impersonating the stock market, Football Index was creating a false sense of security regarding the money invested in the platform.
“Football Index essentially ran a fractional reserve banking system where only a fraction of users’ money and total market capitalization were available for withdrawal at any given moment,” MPs wrote.
“Such a platform would likely have to be subject to liquidity controls and capital requirements, which is not required by the Gambling Commission regulation.
“As a result, Football Index has depended fatally and financially on user growth to not only avoid insolvency, but also to avoid losing its own customers, who are valued at £90 million of their own money,” the letter added.
Earlier this week, Football Index administrators Begbie Traynor initiated a claims process for all Football Index customers, inviting them to file lost money claims online.
The MPs stressed the need for an urgent public inquiry "to sort out who knew what and when", suggesting that the UK's current gambling regulations are not up to the task.
The letter also recommends that a public inquiry expose the perceived shortcomings of the UKGC and prevent any possible recurrence of a similar scenario in the future.
“The Gambling Commission should not be allowed to mark their homework,” the deputies wrote.
“By allowing them to do so, the affected people, their families and the reputation of UK gambling companies will be forced to pay the price for this failure.
“That is why we need a public inquiry,” the letter says.
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