PYMNTS-MonitorEdge-May-2024

Beijing Starts Prosecuting Individuals Behind Huge P2P Lending Scam

Beijing has started prosecuting 26 people who are behind what is alleged to be China’s largest online fraud scam.

According to a report by Reuters, the fraud case involves a close to $8.64 billion scam from online peer-to-peer lender Ezubao. Ten people, as well as Ezubao’s parent companies, Yucheng Holdings and Yucheng Global, are facing charges of fraudulently raising money. Sixteen other people are charged with taking deposits illegally. Other charges stemming from the case include smuggling precious metals, illegal possession of weapons and border crossing without the proper documentation.

The report noted Ezubao, which is one of the larger peer-to-peer lending platforms in China, has allegedly created fake investment projects in an effort to collect 59.8 billion yuan from investors. The site failed to repay 38 billion yuan, noted the report. The Beijing officials called the scam a Ponzi scheme designed to support the lifestyles of the executives.

Reuters noted the scam at Ezubao has raised awareness in China about the risks associated with online lending platforms. The P2P market is fast-growing in China, but a lack of regulations makes it easy for people to get scammed. Since August, China has rolled out new regulations designed to strengthen this part of the financial market.

PYMNTS-MonitorEdge-May-2024