China has arrested 21 people allegedly involved in a massive online Ponzi finance scheme in which some 900,000 investors lost over USD 7.6 billion, the state media reported Monday.
Beijing: China has arrested 21 people allegedly involved in a massive online Ponzi finance scheme in which some 900,000 investors lost over USD 7.6 billion, the state media reported Monday.
Ezubao, an online financing platform, was launched in July 2014 in the country's eastern Anhui province. It offered investors annual returns of between nine percent and 14.6 percent on various projects, sate-run Global Times reported, far more than currently offered by Chinese banks' wealth management products.
The platform had amassed more than 50 billion yuan (USD 7.6 billion) by December. A estimated 900,000 investors had fallen victim to the scam, the report said.
After noticing some abnormal activities on the platform at the end of 2015, the authorities launched an investigation into the company.
Ding Ning, chairman of Yucheng and 20 others who work for Ezubao, were arrested on January 14.
"Ezubao is a typical Ponzi scam," said Zhang Min, president of its owner Yucheng Group and one of those arrested, as saying in custody.
Yucheng's chairman Ding Ning said the company spent more than 800 million yuan buying corporate information to invent the fraudulent projects, the report said.
Yucheng and its affiliates did not have sufficient cash flow to operate normally as of December 5. Also, the company had transferred some of its capital and destroyed certain evidence, and some senior people in the company have fled police said.
Ezubao fabricated most of the projects on its website and paid old debts with money from new investors, the report said.
Efforts are still underway to collect evidence and recover some of the money, to minimise losses for investors, investigators said.