China launches website to aid S$10.6 billion Ezubao fraud probe

The logo of peer-to-peer lender Ezubao at the office in Hangzhou, China.
The logo of peer-to-peer lender Ezubao at the office in Hangzhou, China.PHOTO: AFP

BEIJING (REUTERS) - China's Ministry of Public Security (MPS) has launched a website to help probe Ezubao, the country's biggest online peer-to-peer (P2P) lender, which is accused of defrauding 900,000 investors of more than 50 billion yuan (S$10.6 billion).  Ezubao had been in operation for 18 months when it was shut down by police in December after conducting transactions involving 70 billion yuan. Most investment projects featured on the company website were fake, police said. 

The website, opened to the public on Saturday (Feb 13), will help Chinese police gather information and establish facts about Ezubao, which "involves a large number of investors dispersed across the country, with huge amounts of electronic information," according to its homepage (http://ecidcwc.mps.gov.cn). Investors in ezubao and its related companies, which are under investigation for alleged illegal fund-raising, will be given priority in registering their loss.  The platform will be open for investors of ezubao to register through May 13 with the data provided by investors on their unredeemed investments in Ezubao used for the return of their funds, MPS said.

Executives at Ezubao's parent company admitted in comments carried by official news agency Xinhua earlier this month that it was "a complete Ponzi scheme" that used investor funds to support their lavish lifestyles. The alleged scam underscores the risks in China's fast growing and loosely regulated wealth management product industry, with many products peddled through online financial investment platforms and privately run exchanges.

More than 400 billion yuan had been raised by more than 3,600 P2P platforms by the end of November, according to the China Banking Regulatory Commission. More than 1,000 of those firms were problematic, it said.