Police in Guangdong shutter P2P site and detain 13 executives
The management at online lender Esudai took hundreds of millions of yuan in investor money for personal use, Huizhou authorities say
A large Chinese online lending platform accused of illegal operations has suspended operations, one of hundreds that have been shut this year by the government, as China cleans up a sector ridden with stories of Ponzi schemes.
Police in Huizhou, Guangdong province, said on Wednesday it had detained 13 executives from Guangdong Huirong Investment’s peer-to-peer lending platform Esudai.com. The detainees included its legal representative and chairman Jian Huixing.
China’s government approved a plan, following a mid-April meeting, to clean up the country’s online financial sector, according to people with direct knowledge of the matter, including rules to limit the activities of P2P lending firms.
New rules to bolster trust in China’s peer-to-peer lending platforms
The plan outlines stricter rules for peer-to-peer (P2P) platforms, where lending quadrupled last year to 440 billion yuan (HK$520 billion), according to Citigroup, forbidding them from holding clients’ capital in-house.
Esudai, which roughly translates to “quick loans”, is accused by the local police of illegally collecting deposits, while executives are accused of taking hundreds of millions of yuan in investor money for their own use.
Esudai has raised more than 7 billion yuan from 330,000 investors since it was founded in 2010, according to its website.
Huizhou government officials visited Esudai’s offices on May 20 for inspections, the company said on its website, adding that it was cooperating in the investigation and has operated legally and transparently for six years.
