Super Rugby's most prolific try-scorer, who is planning a court battle with former employer Rugby Australia, had raised more than Aus$700,000 (US$486,000) of a Aus$3 million target from more than 7,000 donors.
But this will now be refunded after his GoFundMe webpage, set up on Friday, was taken down by the platform which said it wouldn't "tolerate the promotion of discrimination or exclusion".
Folau's camp accused GoFundMe of buckling under pressure and lashed out at "a continuing campaign of discrimination against Israel and his supporters", which it said included his personal website coming under "what we believe was a sustained cyberattack".
"Since requesting public donations to help him with his legal action against Rugby Australia, Israel and his supporters have come under intense scrutiny in the media," a Folau spokesperson said in a statement.
"While Israel does not intend to respond in detail at this time regarding the accusations thrown at him or his family, he wants it known that these attacks have hardened his resolve," a Folau spokesperson said in a statement.
"Thankfully, several organisations have already expressed interest in supporting Israel's efforts to raise money for his ongoing legal case."
GoFundMe Australia regional manager Nicola Britton said the campaign was removed "after a routine period of evaluation".
"We have concluded that this campaign violates our terms of service," she added.
"As a company, we are absolutely committed to the fight for equality for LGBTIQ+ people and fostering an environment of inclusivity.
"While we welcome GoFundMes engaging in diverse civil debate, we do not tolerate the promotion of discrimination or exclusion."
Folau, a devout Christian, was fired last month after a Rugby Australia tribunal found him guilty of "high-level" misconduct for posting on social media that "hell awaits" gay people and others he considers sinners.
He has taken his case to Australia's employment watchdog the Fair Work Commission, asserting that he simply posted a message from the Bible.
He is reportedly seeking Aus$10 million, including for lost sponsorship and marketing opportunities.
- 'No room for homophobia' -
Folau's crowdfunding campaign had attracted criticism, with Australian media noting that he was one of the best-paid players in the world and owns a multi-million dollar property portfolio.
Folau was on a four-year contract worth more than Aus$1.0 million annually when he was sacked. Gay rights advocates launched a handful of other GoFundMe campaigns in response to his fundraiser.
When Aus$500,000 was passed over the weekend, Folau, who has played 73 times for Australia, took to Instagram to thank his contributors, saying he was "humbled and overwhelmed".
"I have received thousands of messages from supporters who believe discrimination in the workplace is wrong and has no place in Australia or anywhere else," he said.
The shutdown of his appeal came as Australia's most capped netball player lashed out at the sport for failing to sanction Folau's wife, a New Zealand netball international, for supporting the GoFundMe campaign.
Maria Folau, who plies her trade with Australia's Adelaide Thunderbirds, flagged his campaign on her Twitter feed.
Netball Australia and the Thunderbirds issued statements saying they were committed to inclusive environments within the sport, but her actions did not breach their social media policies.
Liz Ellis, a former Australian captain, said their stance was "not good enough".
"There is no room for homophobia in our game," she tweeted late Sunday. "Anyone who is seen to support or endorse homophobia is not welcome.
"As much as I love watching @MariaFolau play netball I do not want my sport endorsing the views of her husband."https://www.geezgo.com/sps/58416
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