The high-flying Isle of Man pulled out after defeat to an unfancied side -- orchestrated by a player who was quietly registered after the tournament deadline, in a bending of the rules.
The furore erupted as the biennial competition for associations outside world football governing body FIFA, including unrecognised states and ethnic groups, neared its climax in London.
Ellan Vannin -- the Isle of Man's name in Manx Gaelic -- had been among the cup favourites and won their first two group games.
However, after a shock 2-0 defeat to south Somali exile side Barawa, they missed out on qualifying for the quarter-finals on goal difference.
Claiming a lack of available players after their opening match, Barawa had been allowed to bring Mohamed Bettamer into their squad -- though volunteer-run CONIFA did not inform other teams of their decision.
The London-born Libyan under-20 international has played in the African Champions League with Al-Ahli Benghazi.
Bettamer scored in Barawa's 2-1 defeat to North American side Cascadia in match two then scored one goal and created the other in Barawa's surprise win over Ellan Vannin.
The Manx team launched an appeal, calling for Barawa's results against Cascadia and Ellan Vannin to be changed to 3-0 defeats.
However, the appeal was rejected by the cup's management committee, made up of tournament organisers and representatives of the 16 competing teams.
"CONIFA, despite their promotion of morals and integrity, are absolutely no better than other football governing bodies and have turned into a dictatorship," the Manx International Football Alliance (MIFA) body said in an angry statement.
"CONIFA, you have destroyed the dreams of 22 young amateur Manx players, you have belittled a proud nation for the sake of your own objectives. Shame on you."
MIFA called on the tournament's sponsors, teams and match officials to "support morals and ethics and boycott the completion of this tournament".
All eight sides eliminated at the group stage were due to play three further placement round matches but Ellan Vannin walked out before facing Tibet.
The Chagos Islands have been scrambled to stand in for them.
Some on social media accused Ellan Vannin of sour grapes and questioned whether they would have complained had they made the quarter-finals.
"At the heart of it, they thought they could win the competition and were maybe amongst the favourites," Paul Watson, one of the tournament organisers, told 'AFP'.
"I think they were quite shocked to suddenly be eliminated. There were recriminations. I feel for them but I am disappointed that they didn't stay the course."
On the pitch, Northern Cyprus are due to play northern Italy side Padania in the first of Thursday's semi-finals at Carshalton in south London.
Karpatalja face Szekely Land in the other in a clash of two ethnic Hungarian teams from beyond Hungary's modern-day borders.
"It will be an interesting game because they are like brothers for us. But we will give 100 percent," Karpatalja midfielder Alex Svedjuk told 'AFP'.
"We hoped that we could only play each other in the final but we can't do anything about it. We shall beat them!" said Svedjuk, who plays for Bekescsaba in the Hungarian second division.