China P2P fraud trial kicks off

Criminal prosecution of 26 people involved in China's biggest alleged online fraud started in Beijing on Friday, the official Xinhua news agency reported.

The case features online peer-to-peer lender Ezubao and the illegal collection of some 60 billion yuan ($8.64 billion, 8.27 billion euros).

Ezubao's parent companies Yucheng Holdings and Yucheng Global, along with 10 individuals, are charged with fraudulent fundraising, while 16 other people face charges of illegally taking public deposits.

Other charges included illegal possession of weapons and undocumented border crossings, Xinhua said.

Booming P2P industry

Ezubao, once China's biggest P2P platform, allegedly collected 59.8 billion yuan from investors through fake investment projects it advertised on its website. It eventually failed to repay 38 billion yuan. The platform collapsed in February, with executives saying the firm was "a complete Ponzi scheme," which used investor funds to support lavish lifestyles for its managers.

Chinese authorities have since unveiled a slew of new regulations aimed at strengthening the online finance industry. Regulatory officials have said more than 1,700 problematic P2P lending platforms in the country would have to go.

The Asian nation's peer-to-peer industry has boomed in recent years. Outstanding P2P loans had jumped to 956 billion yuan by the end of September, marking a record high, the domestic industry portal P2P001 revealed.

hg/jd (Reuters, Chinadailyasia.com)