Butterfly's Sting:
"When you confirm a critical hit against a creature, you can choose to forgo the effect of the critical hit and grant a critical hit to the next ally who hits the creature with a melee attack before the start of your next turn. Your attack only deals normal damage, and the next ally automatically confirms the hit as a critical."
Butterfly's sting says that the next ally to make a melee attack automatically scores a critical hit. What if the next ally rolls a critical hit? does it cancel the effect or does it pass on to the next ally who scores a melee attack?
Yes this happened.
If the followup attacker hits, its a crit. It doesn't matter if they would have threatened one normally or not. In effect, to specifically answer your exact question, it cancels the effect and does not pass it on to the next attacker at all.