More like scam index, amirite?
Trade With Caution.
That’s not just a flippant thing we say around here. No, it’s something we truly believe in. Offering you the best possible trading conditions, while also simultaneously drilling home the message of the need to look at things the proper way is what Quantfury is about.
We are Quantfurians. We take care of each other. We need to because there are a lot of unscrupulous people out there trying to trick and manipulate others out of their money. And, they are doing so in a lot more sophisticated ways than sending emails about Nigerian Princes.
The trading world has always been a space that attracts scammers, with their half-baked systems (that they’ll teach you for just $500 USD) and their Work-One-Hour-A-Day-From-Paradise-While-Driving-A-Lambo lifestyles that they claim to have. They’d be laughable if they weren’t out there trying to take your money.
It’s under that light that the current implosion of UK-based Football Index has caught my eye.
In case you were unaware, Football Index was billed as a platform that combined stock trading with sports. You bought “shares” of footballers and were paid out in “dividends” that were based on how well the player performed based on fluctuating real-world values — i.e. his stats.
The entire platform was dressed up like a trading site in an effort to legitimize it and make users think that they were doing something that they weren’t. It’s a lot easier to convince yourself that it’s a good idea to “invest” your money than it is to gamble it on whether Harry Kane is going to score a lot of goals this year. But, make no mistake, Football Index was a gambling site that was made to appear like a trading site. I mean, it was owned by a company called BetIndex Ltd.
Had Football Index positioned itself in the same way as, say, DraftKings I wouldn’t have a problem with it (at least in theory. More on that below). There’s nothing wrong with gambling on sports, if that’s something you like to do and you understand that it’s a bit of fun, not a retirement plan. The popularity of Football Index and of DraftKings would suggest that a more ethical version of a player speculation market could be successful.
However, it appears that Football Index was doing a lot more wrong than just some unethical marketing. The whole thing came crashing down after they announced a significant cut to dividends so they could “ensure the long-term sustainability of the platform.” Basically, they ran out of money. Sure enough, a look at their business model would suggest that what they were running had elements in common with a typical Ponzi Scheme.
So, they’ve been shut down now and their will very likely be further consequences in short order. That’s not going to help the estimated 30,000 regular users who are thought to have lost £90 million this month, nor English Championship teams Queens Park Rangers and Nottingham Forest, who had business dealings with the business that have now been terminated.
It’s a sad story with real victims and it’s all part of the ecosystem that is the trading world. And, it won’t be the last story like this as more and more vultures are attracted to all things trading and trading adjacent.
So, let me repeat this one more time: Trade With Caution.