Ezubao, China's largest online peer-to-peer lending company, has been accused by Chinese police of collecting more than 50 billion yuan through illegal methods.
A success story that may have been a Ponzi scheme. Two weeks ago, the police arrested several Ezubao executives, including the CEO, who were charged of collecting capital through illegal means. Ezubao belongs to Yucheng Group and was launched as an online financing platform in mid-2014. The platform attracted lots of customers with promises of high yields between 9 to 14.6 percent.
By December 2015, about 900,000 investors traded more than 70 billion yuan on the platform. But abnormalities emerged, which attracted police and regulators' attention.
Currently, the police is working hard, trying to minimize investors' losses. But policeman expressed that it won't be an easy process.
Analysts say this highlights the risks of the financial industry. The China Banking Regulatory Commission had released rules to request commercial banks to remind investors of possible risks.
Now, the police and regulatory authorities are working together on the Ezubao fraud. A web page will soon be online for investors to register their information, helping the police to gather more evidence on the case.