$7.6b Ponzi scam unearthed in China

Agence France-Presse . Beijing

Chinese authorities have arrested 21 people on suspicion of defrauding around 9,00,000 people of more than 50 billion yuan ($7.6 billion), state media reported, after an online peer-to-peer lender turned out to be a giant Ponzi scheme.
Ezubao offered investors annual returns of between nine per cent and 14.6 per cent on various projects, the official Xinhua news agency reported — far more than currently offered by Chinese banks’ wealth management products.
The platform, launched in July 2014, had amassed more than 50 billion yuan by December, said the report late Sunday, citing police as estimating 900,000 investors had fallen victim to the scam.
Investors were despondent on Monday, with one asking on China’s Twitter-like Weibo: ‘Does our
money just evaporate like that?’
But few comments were visible, leading to suspicions of censorship in a country where authorities impose strict controls to avoid social unrest.
Illegal fund-raising is widespread in China and often involves a large number of investors who have few investment options because of low bank interest rates, an extremely speculative stock market and uncertainties in the property sector.

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