Ponzi scheme sparks protests

China | 25 Jan 2018

Chinese authorities are struggling to quell protests after the collapse of an investment scheme that took about 30 billion yuan (HK$36.7 billion) from millions of depositors.

The implosion of Qianbao.com adds to a string of failures blamed on fraud. Notably, the founder of an online lender was sentenced in September to life in prison for defrauding investors of 49 billion yuan.

Hundreds of people marched on Monday in Nanjing, where Qianbao started in 2012, shouting for officials to act. But a video shows police grabbing investors as others yelled about being beaten up.

That was followed by the Xinhua News Agency message: "Don't organize and don't participate in illegal activities."

Nanjing police announced later that 11 people were held for "disturbing public order" in organizing protests.

Depositors also rallied on December 12 after losing access to accounts, said one, but they "were intercepted and beaten up."

Qianbao had up to 200 million registered users, and founder Zhang Xiaolei - labeled "China's most notorious swindler" - surrendered to police on December 26.

Qianbao, which moved to Shanghai in 2015, promised returns of up to 60 percent in 12 months, in what turned out to be a blatant Ponzi fraud.

Some of the billions from depositors went to buying a football team and a glycerin maker. But many firms Qianbao said it owned did not exist, and Qianbao used money from new depositors to pay earlier ones.

Zhang admitted the collapse was due to his greed but said reckless investors also had to accept the consequences.

ASSOCIATED PRESS

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