Leshi, once hailed as ‘China’s Netflix’, and founder Jia Yueting hit with fines worth US$73.6 million in China for financial fraud

Leshi is fined 240.6 million yuan, and Jia is fined 241 million yuan for falsifying earnings, misreporting facts in IPO documents

Fines come after Jia’s EV start-up FF, which has merged with a blank-cheque company, attempts to raise money in US

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Jia Yueting, the founder of Leshi and EV maker Faraday Future. The CSRC has been urging him to return to China to repay his debts since 2019. Photo: Reuters

Published: 2:12pm, 13 Apr 2021Updated: 2:12pm, 13 Apr 2021

Chinese video streaming provider Leshi Internet Information and Technology and its founder, Jia Yueting, have been fined about 482 million yuan (US$73.6 million) by regulators for financial fraud committed from 2007 to 2016.

The China Securities Regulatory Commission (CSRC) had fined the company 240.6 million yuan for falsifying earnings in the 10-year period and for misreporting facts in its initial public offering (IPO) documents, Leshi said late on Monday. It made its trading debut on the ChiNext, a technology board for Chinese start-ups on the Shenzhen Stock Exchange, in 2010. Jia, 48, has been fined 241 million yuan for the same offences.

Leshi, once viewed as China’s answer to US streaming service Netflix, was the most expensive stock on the ChiNext in 2015, with its market capitalisation hitting 170 billion yuan. But its debts have mounted since 2017 amid its founder’s ambitious plan to expand Faraday Future (FF), a Los Angeles-based electric vehicle (EV) start-up.

The CSRC launched an investigation into Leshi in April 2019 after the company disclosed that Jia, also its biggest shareholder, was suspected of violating financial disclosure laws.

Monday’s fines come after FF, which has merged with Property Solutions Acquisition Corp (PSAC), a blank-cheque company, made an attempt to raise money in the United States through a listing. PSAC is seeking a listing on the Nasdaq and is expected to complete its fundraising exercise within weeks.

In January, the company and PSAC said that they would merge into one entity valued at US$3.4 billion. However, earlier the same month, FF was bailed out by about 30 institutional investors from China, the US and Europe. Leading Chinese carmaker Zhejiang Geely Holding Group as well as a clutch of state-owned enterprises from Zhuhai in Guangdong province were among the white knight investors, who pumped US$1 billion in fresh capital into FF.