Chinese Police Arrest 21 Over Major Ponzi Scheme



Chinese authorities have arrested 21 people involved in the operation of what it said was a $7.6 billion Ponzi scam, state-owned Xinhua news agency said on Monday. It reported that Ezubao, one of the country’s largest peer-to-peer companies, offered mostly fake projects to about 900,000 investors.

The scale of this case underscored the risk of China’s online finance industry, particularly its peer-to-peer (P2P) lending business. Most of its malpractice takes place on a small scale, and as a result has failed to stir much national interest.

Nonetheless, the sector has been experiencing strong growth in recent years. Morgan Stanley estimated that last year alone, the total lending volume was $33.2 billion, far surpassing the US. The success of such online lending platform in China is due to its ability to cater to a crowd that is typically ignored by state-owned banks, such as small businesses and students.

Xinhua said most of the money from Ezubao’s investors was used to fund the lavish lifestyle of top executives, including Ding Ning, the chairman of Yucheng Group, which launched Ezubao in 2014. He was among those arrested, having spent some $150 million on real-estate investments, cars and luxury goods.

The police said they have frozen and seized the assets of Ezubao and companies linked to it as part of investigations. This is after they took 20 hours and two excavators to unearth 1,200 documents and other evidences that the suspects had buried underground, according to Xinhua.

Orignal Sources:

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