Massive Chinese Online Lending Platform With 10 Million Users Implodes, May Be Ponzi

Via Investing In Chinese Stocks blog,

An online lending platform Tang Xiaoseng was shut down by authorities over the weekend. Media warned about the company in 2016 and some have questioned whether it is a legitimate business because it offered extremely high returns to entice investors.

According to a 2016 report, the incentives could generate 75 percent annual returns.

iFeng: 近800亿网贷平台爆雷了!成立3年用户超1000万

This is an online loan platform that claims to be a state-owned enterprise with a transaction volume of 75 billion yuan and a membership of over 10 million.

According to reports from various sources, online loan platform "Tang Xiaoxuan ran away", "parent company gold service was investigated", company legal person suspected "self surrender", employees "departed", investors could not cash out, and many other news breaking.

Investors cannot take cash

The fund monarch learned in some investors' exchange groups that some of them invested family pension money.

Others invested hoping to save up for a home.

One homebuyer is closing on a house and their downpayment is locked up:

The maximum amount invested by the investors who reported on the scene was nearly 3 million yuan, and small investors also invested tens of thousands of yuan. “This is the money I bought for the house. The deposit for the house was paid. There are days to expire. Now the money is not available.” An investor reluctantly said, “The day before yesterday put 50,000 yuan yesterday. With 10,000 yuan, it will be able to arrive quickly, but it is not enough to withdraw it today." Most investors' investments are due in the near future. This is why many investors have not mentioned it before.

The transaction volume exceeds 75.0 billion yuan

According to public information, Tang Xiaojun's operating company is Zibang Yuanda (Shanghai) Internet Financial Information Service Co., Ltd., which was established in October 2014 with a registered capital of RMB 260 million and legal person Tao Lei. The shareholders of Zibang Yuanda are Zhibang Jinfu Network Technology Group Co., Ltd. (with a shareholding ratio of 99%) and Zibang (Shanghai) Investment Management Co., Ltd. (with a shareholding of 1%).

In addition to Tang Xiaoxuan, Zibang Financial Services also has products and services such as immediate loans, Zibang Wealth, enjoyment of multiple periods, interest and interest, etc. Zhibang Jinfu is wholly-owned by Zibang (Shanghai) Investment Holdings Co., Ltd. The investment company also has two shareholders of natural persons, namely Tao Lei and Yu Yongsheng.

The specific amount of money involved by Tang Xiaoxuan is currently unknown, but it involves a wider range of investors. According to Tang Xiaoxuan's briefing, Tang Xiaoxuan went live on May 5, 2015. In less than a year, the turnover would have broken 10 billion yuan. According to the latest data, as of August 2017, Tang Xiaoxuan has reached 10 million registered users and the transaction volume exceeded 75 billion yuan.

Tang Xiaoseng used very generous rebates to attract investors:

The rapid expansion of the transaction size had to be attributed to the long-term high rebate activities. According to the channel rebates, Tang Xiaoyi returned 100 yuan for 3 days returned 50 yuan, 13,000 yuan for 37 days, 500 yuan; 2000 yuan, 16 days, return 90 yuan. This high cost rebate has always existed.

In 2016, there was a media alert to the risk:

1. Some people have calculated that, with activity income, Tang Xiaoyi’s annualized yield of current products on the 10th can reach 75%, which is a bit scary.

2, high-yield sources difficult to explain, suspected capital pool

Tang Xiaoxuan claimed to be a P2F (personal to financial institution) model. Assets are bank-level, safe and reliable.

According to common sense, the overall interest rate for "bank level" assets will not exceed 8%. According to a recent report, the average yield of bank wealth management products has dropped to 4.29%, and financial product portfolios such as trusts, funds, asset management, banks, etc., can hardly exceed 8% at the current market rate.

3. There is not enough disclosure of product information on Tang Xiaoying, and there is no way to judge the authenticity. For example, whether a third-party borrower borrows money from Tang Xiaoxuan or whether Tang Xiaoxuan actually purchased a third-party wealth management platform product, because it could not be confirmed because it was not corroborated by the relevant contract. e renting treasure has tens of billions of dollars by way of purchasing large quantities of fictional borrowing names. Judging from the existing materials, Tang Xiaotong has a question mark as to whether there is any act of issuing fictional assets.

In addition, the latest operating data found by the Fund’s official website today shows that as of May 31, the amount of funds still to be received by Tang Xiaotong has reached 930 million yuan. It is worth noting that the data shows that Tang Xiaolian has accumulated 54,000 loans, but the number of overdue transactions is 0. The data is incredible.

Annualized returns exceed 8%, claiming to be "central state enterprise background"

Since its establishment, Tang Xiaoyi has been surrounded by doubts. Many times it was exposed to funds pool, self-financing, financing fraud, mismatches and other news. Its parent company, Jinbang, is the news of the cooperation of fake state-owned enterprises:

Tang Xiaoyu, the parent company of the company, Jinbang, in January 2017, Zibang Jinfu announced that it had won the “Ruibao Liyuan” strategy of the central company and subsequently “Ruibao Liyuan” was investigated for alleged fraudulent schemes in the online pyramid scheme. The state-owned financial service "has also run aground. At the same time, this so-called state-owned enterprise "Ruibao Liyuan" has already become a private enterprise, rather than its so-called "central enterprise," after a series of changes in equity.

However, Tang Xiaoxuan has questioned the fact that the Chinese government has not fallen for several years. The industry believes that this may be due to the support of its offline wealth management business. It is understood that there are 41 branches in Shanghai. According to the network data, the resources of Zibang Wealth also opened in some cities such as Zhejiang and Jiangsu.

The recent Chairman of the China Banking Regulatory Commission, Guo Shuqing, said:

In the fight against illegal fundraising, efforts should be made to make people realize that high-income means high risk and that the rate of return exceeding 6% will be questioned, exceeding 8%. Is very dangerous, more than 10% will be prepared to lose all of the principal."

The Financial Times published an article discussing an impending regulatory crackdown back in April: China’s P2P lenders brace for renewed regulatory crackdown

Comments

overbet Fred123 Tue, 06/19/2018 - 20:19 Permalink

75 percent annual returns

Sounds legit.

Ponzis can be great as long as you get in early. I invested in one. They reused the same collateral. You can make your entire investment back in a year or two if youre in early. Once youre on a freeroll you can decide to pull it or let it ride. I pulled it early. Had a few more years to go. 

In reply to by Fred123

Antifaschistische 847328_3527 Tue, 06/19/2018 - 22:07 Permalink

I said this a couple of years ago here on ZH.   I spend a lot of time in China, and have many good Chinese friends.  I consider them my extended family.   Walking the street of China a local will be constantly telling you "those shoes aren't real", "that x is fake", "that pure raw honey is fake", and on and on and on.  Basically, the Chinese people know not to trust each other and I'm making no value judgement here.

However, some guy in a suit visits with you and tells you there is a great investment opportunity and they get out the checkbook and empty their savings account buying promises of future wealth.   They'd never buy a pair of tennis shoes from this guy, but they'll give him $30,000 for an 'investment' they have no way of validating as legitimate.   This is something i've never understood and I've discussed it all my local Chinese friends.  They completely agree since many have had family members in China getting fleeced by these guys....and it really helps if the guy drives an expensive car.

In reply to by 847328_3527

ElTerco Antifaschistische Wed, 06/20/2018 - 00:05 Permalink

"Basically, the Chinese people know not to trust each other and I'm making no value judgement here.

However, some guy in a suit visits with you and tells you there is a great investment opportunity and they get out the checkbook and empty their savings account"

.

It's because of rampant superstition in China. They think that "success" rubs off on anyone who is "near" it. They believe "luck" can be imbued in objects, and passed on. Because of this, the quickest way to wealth in China is to buy an expensive car, expensive clothes, expensive accommodations, and lie your ass off. The sociopath article that was circulating on ZH today should have been about Chinese culture.

In reply to by Antifaschistische

Oldguy05 Escrava Isaura Tue, 06/19/2018 - 21:30 Permalink

Greeting. I am a Hang Shu prince of the Zao Shi empire. I am having troubre moving funds out of the country and wirr pay you 30,000 renminbi to herp me. I need your name, address, emair and banking information as werr as your passwords for the aforementioned and I wirr deposit the funds in your account upon compretion of our transaction.

In reply to by Escrava Isaura

ChaoKrungThep overbet Wed, 06/20/2018 - 00:43 Permalink

Did the same in Thailand in the 1980s, the Oil Tanker investment, 6%/mth - 76% p.a. We got in early, broke even in 16 mths, then coasted. It all crashed after three years. Friends lost everything, had them sleeping in the living room for a few months. Told them it was a ponzi but they borrowed on their homes to play. Thais are crazy.

In reply to by overbet

roddy6667 ChaoKrungThep Wed, 06/20/2018 - 11:08 Permalink

I've been living in China for 5 years, visiting since 2009. I don't hear this fake Chinese accent that so many posters on this site like to adopt. I teach children English, up to age 11, and they have no problem with "R" or "L". I also tutor TOEFL and SAT students for college. They don't talk like that either. I taught my wife to speak English, and she never had any problem with it. Where do these people who like to make fun of the way Chinese talk get their information? Old movies? Other racist clowns?

They need to STFU.

In reply to by ChaoKrungThep

Adolfsteinbergovitch p4424119 Tue, 06/19/2018 - 23:39 Permalink

So you finally fixed your typos but you still aren't professional enough to look into the details of your fake ad. I guess it all comes up to the level of intellect that is required to do the job which I do not wish to discuss, for I just had lunch. 

$24551 @85/h gives roughly 290 hours of porno work per month. Man if that's not milking people like cows then what is this? 

Are you one of these Jewish porn moguls? 

In reply to by p4424119

Buck Johnson Fred123 Wed, 06/20/2018 - 14:48 Permalink

Exactly, why do you think that so many billionaires and millionaires are sneaking out of the country to other parts of th world with their ill gotten gains and/or just being rich in the wrong place at the wrong time. They know about the revolution of the massive poor in their times and they always took down the ones in power and all the rich at the time.

 

 

In reply to by Fred123

francis scott … Tue, 06/19/2018 - 22:36 Permalink

On a long enough timeline, everything is ponzi.

 

Including ZeroHedge's favorite economic theory:

      

                      C A P I T A L I S M

 

(Isn't that why everybody is so manic these days, Tyler?)

surf@jm francis scott … Wed, 06/20/2018 - 08:46 Permalink

"From each according to his ability, to each according to his needs" is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Program.[1] The principle refers to free access and distribution of goods, capital and services.[2] In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist system will produce; the idea is that, with the full development of socialism and unfettered productive forces, there will be enough to satisfy everyone's needs.......

 

In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist system will produce;

Stupid is as stupid does........

Tell it to Venezuela moron........

In reply to by francis scott …

roddy6667 Tue, 06/19/2018 - 22:42 Permalink

Excuse me, but if somebody offers interest rates up to 75% APR, a normal person would run in the other direction. People who lost money in this scam should not have money. They might use it to harm themselves or others. The example in this article is P2P lending, which has had a giant shakeout in China lately. 

BTW, it is possible to make that kind of interest on real estate when prices are rising. If you put 10% down on a (theoretical) $100,000 property and it goes up 10% in value, you have made 100% before carrying charges and expenses. Your investment is $10,000, not $100,000. You made $10,000. Presto! 100% APR.

With all the new construction and rising prices in China, it is so easy and reliably safe (so far) to make high interest money, I wonder why these "shadow banking" shops are even doing business. Most people pay cash to buy a second or third home for investment purposes, but some sharpies are taking out mortgages to get the real leverage. The government is cracking down on them.

surf@jm Wed, 06/20/2018 - 08:43 Permalink

"Made in China".....definition.....

A derisive statement intended to denote low quality, and or low cost, usually used to express a warning to avoid purchase of a product.

During the 1970`s, "Made in Japan" had the same definition......