Real estate mogul surrenders to police on charges related to P2P lending platform
Sep 2, 2019
Dai Zhikang, the billionaire founder and chairman of Shanghai-based investment and real estate development conglomerate Zendai Group, turned himself in to police on charges related to his company’s peer-to-peer (P2P) lending platform, which was shuttered in early August, according to a statement issued by the Shanghai police on Saturday.
Why it matters: Laocaibao, a P2P lending platform under Zendai Wealth Management, is the latest to drop out of the once-booming P2P lending space as Chinese regulators ratchet up measures to prune the troubled sector, leaving it in tumult.
- Last month, the company abruptly announced that it would liquidate its P2P lending platforms said to be collectively worth more than $1.4 billion.
Details: According to a statement by the Shanghai Public Security Bureau on Sunday, Zendai is being investigated for illegal fundraising allegations reported by the public.
- Dai, the legal representative, and the company’s general manager turned themselves in on August 29 and confessed to illegal acts including misappropriating funds and setting up a capital pool.
- According to the announcement, the bureau has taken legal measures against 41 suspects, including Dai, and has seized assets relevant to the case.
- The police found that Zendai had raised funds from the public through two of its companies—Zendai Wealth Management, which operates Laocaibao.com, and Zendai Money, a microfinance platform—without obtaining approval from authorities.
Context: Zendai said last month that it had to shut down its online lending platforms after its custodian bank Huarui Bank terminated their partnership. The company suspended new loans and laid off employees of the online lending units.
- Hundreds of lending platforms have collapsed and shut down under regulatory pressure over the past two years.
- Regulators have introduced a registration program for P2P lenders, requiring platforms to register on a monitoring system to provide reports about their operation. Regulators urge platforms to observe its “triple decline” guideline: reduce outstanding loan balances, the scale of operations, and the number of investors and borrowers.