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China seizes $1.5 billion in online lending crackdown
Source: Associated Press
China seizes $1.5 billion in online lending crackdown
By JOE McDONALD
February 18, 2019
BEIJING (AP) — Chinese police have investigated 380 online lenders and frozen $1.5 billion in assets following an avalanche of scandals in the huge but lightly regulated industry, the government announced Monday.
Beijing allowed a private finance industry to flourish in order to supply credit to entrepreneurs and households that aren’t served by the state-run banking system. But that threatens to become a liability for the ruling Communist Party after bankruptcies and fraud cases prompted protests and complaints of official indifference to small investors.
The police ministry said it launched the investigation because person-to-person, or P2P, lending was increasingly risky and rife with complaints about fraud, mismanagement and waste.
The ministry gave no details of arrests but said more than 100 executives were being sought by investigators and some had fled abroad. It said authorities seized or froze 10 billion yuan ($1.5 billion) but gave no indication how much might be returned to depositors.
Police say some lenders and investment vehicles were brazenly fraudulent, while others collapsed after inexperienced founders failed to manage risk.
-snip-
By JOE McDONALD
February 18, 2019
BEIJING (AP) — Chinese police have investigated 380 online lenders and frozen $1.5 billion in assets following an avalanche of scandals in the huge but lightly regulated industry, the government announced Monday.
Beijing allowed a private finance industry to flourish in order to supply credit to entrepreneurs and households that aren’t served by the state-run banking system. But that threatens to become a liability for the ruling Communist Party after bankruptcies and fraud cases prompted protests and complaints of official indifference to small investors.
The police ministry said it launched the investigation because person-to-person, or P2P, lending was increasingly risky and rife with complaints about fraud, mismanagement and waste.
The ministry gave no details of arrests but said more than 100 executives were being sought by investigators and some had fled abroad. It said authorities seized or froze 10 billion yuan ($1.5 billion) but gave no indication how much might be returned to depositors.
Police say some lenders and investment vehicles were brazenly fraudulent, while others collapsed after inexperienced founders failed to manage risk.
-snip-
Read more: https://apnews.com/bb7b5031c7f7480d8b9aa0a69d07944b