Security & Fraud

China Recovers Over $1.5 Billion From Ezubao

Since China launched an inquiry into Ezubao, an online lending platform, it has recovered more than $1.5 billion of illegal assets.

Reuters, citing the official Xinhua news agency, reported Beijing public security bureau disclosed the figure in terms of illegal assets. Regulators in China have been on a campaign to crack down on the peer-to-peer lending sector, which is exploding in growth. In August, China warned that close to half of the about 4,000 of the peer-to-peer lending companies were “problematic.”

According to the report, police in China seized close to 300 million yuan in cash as well as gold to the tune of 187,000 grams. The police also seized real estate, jewelry, stocks, cars and helicopters from Ezubao. It was running for a year-and-a-half before being shut down in December 2015. China discovered that all of the projects on the site were fake. Reuters noted that of the 26 suspects rounded up, 11 are facing trial for fraud. The remaining 15 have been charged with illegal fundraising.

In February, news broke of the fraud charges against Ezubao, which gathered $7.6 billion, impacting more than 900,000 investors utilizing its peer-to-peer lending platform within the country. The company grabbed attention by way of marketing efforts and the lure of “big returns.” Yet, said some executives, as much as 95 percent of projects pushed by the company were, in fact, fake. The promise of returns as great as 14 percent, especially in a slowing economy and low savings rates, took in the multitudes of investors. The funds went to gilded lifestyles for company executives of parent company Yucheng Group. Among the more eye-popping gifts that changed hands: Chairman Ding Ning bought President Zhang Ming a $20 million Singapore property, a $1.8 million pink diamond ring and cash bestowments of as much as $83 million.

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