The expulsion of four women's doubles pairs sent shockwaves through the tournament, removing China's top-seeded duo and other doubles pairs from the South Korean and Indonesian teams.
"I'm very, very sorry this has happened for both the players and for the sport," Badminton World Federation secretary general Thomas Lund said.
"We made this decision for the best interests of all the players. The most important thing is to deal with such cases in a firm and fair manner."
The head coach of China's badminton team Li Yongbo told Chinese media he was responsible for his world championship duo Yu Yang and Wang Xiaoli's failure to compete for victory.
"As head coach, I owe the supporters of Chinese badminton and the Chinese TV audiences an apology," he was quoted as saying. "Chinese players failed to demonstrate the fine tradition and fighting spirit of the national team.
"It's me to blame."
Both the South Korea and Indonesia teams appealed the decision, but the Indonesians later withdrew theirs. China's delegation said it 'fully respected' the punishment and would launch an investigation into its badminton team.
The BWF upheld all of the disqualifications.
"The last thing we'd like to do is to DQ (disqualify) anyone," added Lund. "We're so sorry it has come to this. It was a very difficult decision for the technical official to make."
Tuesday's evening session of the badminton descended into chaos, with fans jeering two separate matches as players deliberately missed shots and dumped serves into the net in a race to the bottom, forcing the BWF to mount an investigation.
A BWF panel charged the players with "not using one's best efforts to win a match" and "conducting oneself in a manner that is clearly abusive or detrimental to the sport".
The decision knocked China's top-seeded pair of Yu Yang and Wang Xiaoli out of the tournament, along with South Korean pairs Jung Kyung-eun and Kim Ha-na, and Ha Jung-eun and Kim Min-jung.
Indonesia's Greysia Polii and Meiliana Jauhari were also expelled for their involvement in the second of the two tainted matches on Tuesday.
The head of Indonesia's badminton federation denied it had instructed its players to 'throw' their match.
"We come here not to lose medals, we want to have medals," Indonesian Badminton Association chief Erick Thohir said. "I think to blame China is also not fair.
"I think the BWF (Badminton Wold Federation) should take a look at the history of the last tournaments before they make judgements."
The disqualification polarised players and team officials.
While some regarded it as unduly harsh, others welcomed it as a good precedent for the sport, which has been dogged by complaints from players about similar manipulations in other tournaments.
Most pointed the fingers at the Chinese team for creating the scandal.
"I can say China has played dirty," said a coach with the Korean delegation. "Unsportsmanlike. They fixed the matches, that's why everything is messy here."
Players slammed the BWF for instituting a format that was ripe for manipulation.
Badminton officials introduced a preliminary pool round for London after starting the tournament with knockout rounds in previous Games. Denmark's head coach called for it to be overhauled, given it was prone to manipulation.
"Why would the tournament rules people have (a format) like this?" men's singles world number one Lin Dan told reporters at Wembley Arena. "If they just had a knockout round it would all be fine. You lose and that's it," the Chinese added.
Lund said the BWF needed to review its regulations to prevent a similar scandal from reoccurring.
"The group play has generally been a tremendous success for this tournament, it has created really good matches and a lot that we've never seen before," he added.
"But we also have to be clear that there has been a problem here, we have to take that problem very seriously."
India's badminton team stepped into the furore, accusing a Japanese women's doubles team of going easy against Taiwanese opponents from the same group as India's doubles pair Jwala Gutta and Ashwini Ponnappa.
Lund said there were no grounds to take the matter further.
Danish mixed doubles player Thomas Laybourn spoke of a "tragic" situation in which the scandal had overshadowed the genuine competitors and blackened the sport's name.
"I heard the news yesterday and everyone was talking about this and all the newspapers were writing about it, so in the end it could mean that badminton is being taken off the Olympic programme in 2020," Laybourn told Reuters.
"When something like this happens it's not good publicity."
Four teams were promoted into the quarter-finals to replace the disqualified pairs.
The scandal overshadowed the day's play at Wembley Arena where world number one Lin Dan booked a quarter-final place after beating old rival Taufik Hidayat of Indonesia.