Spanish wireless networks provider Gowex said over the weekend it would file for bankruptcy and its CEO had resigned.
This capped a dramatic collapse to a success story that saw the company's stock value grow 22-fold as it sought to conquer the world with its wi-fi services.
The move was triggered on Tuesday by the publication of a report by a firm called Gotham City Research alleging Gowex was misrepresenting its accounts.
The company and its CEO and founder Jenaro Garcia Martin had first denied the allegations and said they would take legal action against Gotham City Research.
They also said they had hired PricewaterhouseCoopers to carry out a forensic audit of the firm that would confirm the Gotham report was "false".
But on Sunday the company's line of defence came down as Garcia Martin said he had reported false accounts for at least the last four years.
"Mr Garcia Martin, chief executive officer and chairman, has told several board members that the accounts of the company, for at least the last four years, were unfaithful and that he was responsible for this misrepresentation. The board has accepted his resignation," Gowex said in a statement.
Gowex is one of a crop of Spanish technology companies that have raised funds by listing on the country's alternative market, MAB by its Spanish initials, which many analysts deem less transparent that the benchmark index Ibex.
While the case echoes other recent famous bankruptcies, including fishing firm Pescanova and entertainment company Zinkia, it is also a stark reminder for investors that many Spanish corporates still face an uphill battle to recover from a five-year economic slump.
Spain's economy has emerged last year from two recessions, but record high bankruptcies are expected to continue as tens of thousands of small companies struggle with debt left over from the crisis.
Unlike competitors such as US-based Boingo, which are reporting losses for expanding free wi-fi services, Gowex said it made a €28m profit in 2013.
The company said it is making money both from its business-to-business telecommunication unit as well as from its free wi-fi platform, through which it sells roaming, advertising and e-commerce services.
It also says it operates free wi-fi hotspots in 91 cities around the world, including New York, Madrid, Dublin, Bordeaux or Santiago de Chile.
Until trading in its shares was suspended on Thursday after sliding around 60% in two days in the wake of the Gotham report, wiping around €870m off the company's market value, Gowex had enjoyed an unequalled ride on the stock market.
Shares jumped from €1.2 each in July 2012 to €19.9 each on the eve of the Gotham report, having reached a high of €26.34 in April 2014 after new contracts announcements and the backing of well-known institutional investors.
Gowex said in its statement that in anticipation it would likely not be able to meet debt repayments the board had agreed to file for bankruptcy and was looking at additional measures to protect the company's interests.
Spain's stock market regulator earlier this week asked the US Securities and Exchange Commission (SEC) and the UK's Financial Conduct Authority (FCA) to provide information about Gotham in order to analyse whether the publication of its report could constitute market abuse.
The Comision Nacional del Mercado de Valores (CNMV) also said it would investigate the functioning of the MAB.
The MAB said in a statement it had decided trading in Gowex shares would remain suspended until further notice. It said separately it had sent Gowex's Sunday announcement to the CNMV as it may constitute market abuse.