China’s Operation Fox Hunt has led to the arrest of 62 Chinese nationals abroad and the seizure of 10 billion yuan ($1.5 billion) in assets from 380 fraudulent peer-to-peer (P2P) lending platforms, according to a Reuters report. The crackdown, which started up in June, comes as part of President Xi Jinping’s war on corruption, which has focused heavily on government officials and business executives who have allegedly fled abroad with assets.
The Chinese ministry said their teams “successfully brought back 62 criminal suspects from 16 countries and regions, including Thailand and Cambodia.”
The charges stem from illegally using P2P platforms to gather funds. At its peak in China, there were 3,500 P2P firms promising low investments and high returns for retail investors. As of last year, there were outstanding loans of 1.49 trillion yuan ($217.96 billion) in the country.
After Beijing took steps to defuse “debt bubbles” and shine light on what it called the shadow lending economy, a wave of company collapses hit the P2P sector. Investors who were wiped out by those collapses were understandably displeased.
As recent investigations have discovered, investors, by and large, were lured into the industry by promises of high returns and low risks. What those investors did not know, according to the ministry, is that the investment data they were presented was largely falsified. Nor did they anticipate how many P2P operators would take the money and run, so to speak, and embezzle funds before heading abroad.
It seems the Chinese government, however, has decided the offenders need to come home and face their unhappy public.