21 arrested in Chinese $7.6bn P2P lending scandal

Beijing police have arrested 21 people associated with so-called peer-to-peer lender Ezubao. China's state-run news agency, Xinhua, suggests Ezubao was actually “a complete Ponzi scheme” that took in over $7.6bn from investors. It is the biggest scam yet to emerge from China’s largely unregulated peer-to-peer (P2P) lending sector, and police reportedly had to use two excavators to uncover some 1,200 account books that had been buried deep below ground, according to Xinhua. Ezubao was China’s fourth largest internet P2P lender, it fabricated most of the projects on its website and paid old debts with money from new investors, Xinhua said.

HONG KONG — A Chinese online finance company bilked investors out of more than $7.6 billion, spent lavishly on gifts and salaries and buried the evidence, according to local authorities who described the operation as an enormous Ponzi scheme.

The accusations throw a shadow over China’s online finance industry, a lucrative area for many global leaders in the sector, but one that the authorities say has also drawn a growing number of cases of fraud and flameouts.

Chinese officials say that the online company, Ezubao, once a dynamo of the industry, offered mostly fake investment products to its nearly one million investors, according to the state-run Xinhua news agency. The authorities arrested 21 people in Anhui, the eastern Chinese province where Ezubao is based, and closed some of the platform’s operations, the agency reported on Sunday.