Zhang Xiaolei, head of China-based online financial platform Qbao.com, and who has been under investigation, surrendered to local authorities on Thursday (Dec. 28). Citing state news agency Xinhua, the DailyMail.com reported Xiaolei surrendered himself to a police station earlier this week.
Qbao.com, which enabled members to make investments and has reportedly handled more than $7.65 billion in transactions, had boasted returns of more than 40 percent and said its customers could earn money by viewing advertisements. According to Xinhua reports, more than 50 billion yuan had flowed through the five-year-old platform as of September.
Qbao.com has around 200 million members that are required to make deposits on its financial platform. The company’s website has now been shut down and a message on the site says that Xiaolei is “suspected of committing crimes,” but does not elaborate further on the matter.
The Chinese government’s decision to go after Xiaolei and Qbao.com comes as regulators in the country have vowed to clamp down on microlenders over the Internet. In November, a high-level Chinese government agency issued a notice urging provincial governments to halt approval of new web-based online lenders. According to news from Reuters at the time, the regulatory body in charge of reducing risks in the online finance sector — an issue currently exploding in China — also advised regulators to restrict the granting of new approvals of microloan firms that want to lend money across China.
Internet microloan companies have been performing well in the last year, thanks, in part, to a lack of stringent government rules. The firms are lending to consumers in China that have been turned away by traditional Chinese banks. However, interest rates on these tiny loans can be very high — something borrowers often do not realize.
China has pledged to intensify a crackdown on financial crime to safeguard national security and fend off financial risks amid a rise in pyramid schemes, frauds and illegal fundraising.