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February 27, 2015

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Hunt for P2P lender and 226m yuan

POLICE are hunting an official with a Shanghai peer-to-peer lender who is alleged to have run off with 226 million yuan (US$36.1 million).

More than 1,600 investors with Baiyin Wealth Co are said to be out of pocket after the company’s former legal representative, Lai Changfeng, vanished.

“We’ve opened an investigation involving this company and hope to help them solve it,” a police official told Shanghai Daily yesterday.

Investors with Baiyin Wealth, which has been operating for 4 years, reported problems withdrawing funds in late January.

On January 29, it was reported to police that Lai had disappeared with the cash, Shanghai Morning News reported yesterday.

Baiyin Wealth, which operates P2P platform Redaiwang.com, promised investors returns of between 18 percent to 22 percent on periods ranging from three months to a year, according to its website. But investors are now left counting the cost.

“I put a million yuan into a three-month program, on the advice of an acquaintance,” one victim, surnamed Wang, told Shanghai Morning News.

“I thought I wouldn’t be cheated as the company claimed to use a third-party company as a safeguard, but I was wrong,” added Wang.

Part of China’s shadow banking sector, P2P platforms attract money from investors with the promise of high interest, and then lend it at higher rates.

Borrowers seeking relatively small sums often turn to P2P lenders as banks are often reluctant to lend such amounts.

The sector is booming in China, with funds raised on P2P lending platforms totaling 252.8 billion yuan last year — up 139 percent on 2013, according to Online Lending House, a web portal that tracks the sector.

But critics say the sector is poorly regulated, leading to online platforms folding suddenly, with lenders losing their cash.

Around 110 P2P platforms in China were affected by fraud problems last year, Online Lending House said.




 

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