SHANGHAI, Feb 5 (Reuters) - Beijing has called on local
authorities to crack down on illegal fundraising platforms after
China's largest online peer-to-peer (P2P) lender was found to
have collected more than 50 billion yuan ($7.6 billion) for fake
investment projects.
The State Council said on its website late on Thursday that
strict precautions must be taken to prevent future illegal
fundraising cases, and that the government would work to educate
the public better about such financial risks.
Detained executives from the parent company of Ezubao, once
China's biggest P2P lending platform, have said the firm was a
Ponzi scheme that advertised products promising annual returns
of up to 14 percent, attracting 50 billion yuan from more than
900,000 investors.
The case has underscored the risks created by China's
fast-growing $2.6 trillion wealth management product industry.
Many products are sold through loosely regulated channels,
including online financial investment platforms and privately
run exchanges.
More than 400 billion yuan had been raised by more than
3,600 P2P platforms by the end of November, according to the
China Banking Regulatory Commission. More than 1,000 of those
firms were problematic, it said.
($1 = 6.5638 Chinese yuan renminbi)