Eleven investors held after Chinese Ponzi scheme protests

Eleven investors have been detained in eastern China after protests erupted over the collapse of the country’s latest Ponzi scheme, dubbed “money treasure online”.

Police in Nanjing said they detained the investors and warned another 11 for organising illegal gatherings and disturbing public order, the city’s Public Security Bureau said in a statement posted to its social media account.

The Ponzi scheme – called Qbao.com – took in billions of yuan from millions of investors with the authorities estimating it owed 30 billion yuan (US$4.7 billion) at the time of its collapse last month.

Investors were wooed with promises of returns as high as 60 per cent. They were asked to do small “work” tasks on Qbao.com’s website.

Some of the tasks required users to watch Qbao.com’s advertising videos, which could take just minutes each day.

The collapse of Qbao, another popular Chinese Ponzi scheme

“Users were lured in by high returns for completing advertising tasks,” Qbao.com’s website now says in a bright blue notice that the authorities have swapped in for its original page.

The company took in new users’ money to repay old users, the notice says, citing the Nanjing police department.

Users were also encouraged to invest large amounts of money in Qbao’s wealth management products, like one that required an investment of 200,000 yuan for three years for a return of 1.44 million yuan, the state news agency Xinhua reported on Thursday.

The founder of the scheme, Zhang Xiaolei, turned himself in to the authorities last month when he found the company unable to continue payouts.

“I’m deeply sorry to investors for the losses I have caused,” Zhang wrote in a statement reposted by Xinhua.

Pyramid schemes: a dark corner of China’s economy

“We took in money from investors borrowing new money to repay old. Now we can’t repay the principal or interest.”

Zhang said the company had one million active users as of last month.

Since Zhang’s arrest and state media giving prime time coverage to the case, bilked investors have taken to organising small scale protests, with some calling on the authorities to release Zhang and let the company continue operating.

Other investors say they just want justice, with dozens chanting yaofan, meaning “we want food” or “we want money” during the Nanjing protests, videos show.

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Qbao.com had centred its operations in Nanjing where the authorities announced they had detained protesting investors.

Similar investor protests have followed the collapse of other Ponzi schemes in China, such as the end of peer-to-peer investment platform Ezubao in 2016.

The online firm bilked 900,000 investors out of US$7.6 billion – among the biggest financial frauds in recent history.