Founder of P2P lender Tuandai.com sentenced to 20 years in jail for illegal deposit taking
- Tang Jun, who founded Tuandai.com, was sentenced to 20 years in jail and fined 51.5 million yuan for illegal fundraising
- The court decision came three years after Tang was arrested on charges of designing fake investment products and disturbing the financial order
Tang Jun, previously one of the key faces of peer-to-peer (P2P) lending in China, has been jailed for 20 years for illegal fundraising, after a three-year investigation into the sudden collapse of one of the largest P2P lending platforms in the country.
Tang, who founded Tuandai.com, was sentenced to 20 years in jail and fined 51.5 million yuan (US$7.37 million) for illegal fundraising, according to a stock exchange filing released on Thursday by Paisheng Intelligent Technology, which owned the P2P website before it collapsed in 2019 due to turnover problems.
The decision was made by the Dongguan Intermediate People’s Court, which also fined the Guangdong-based company 1.61 billion yuan for fundraising fraud, illegally absorbing public deposits, and manipulating the securities market.
Zhang Lin, a co-owner of Tuandai.com and former general manager of Paisheng, was also sentenced to 20 years in prison and fined 41 million yuan. Another 44 people were sentenced to various jail terms, ranging from one and a half years to 15 years for participating in financial crimes, according to the stock exchange filing.
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The court decision came three years after Tang and Zhang were arrested on charges of designing fake investment products and “disturbing the country’s financial order”, along with another 42 people who worked at Tuandai.com.
Tuandai.com, established in 2011, was once ranked as the 15th-largest P2P lending platform in China with about 220,000 lenders and borrowers, and loans totalling 14.5 billion yuan. The P2P sector in China, once touted by the government as an innovative model to help reform the mainland’s finance industry, has been under strict regulatory review since 2018 after Chinese President Xi Jinping prioritised a reduction in financial risks.
Tougher regulation triggered a wave of collapses as online lenders succumbed to liquidity issues, and by the end of 2019 the number of P2P services had plunged to 343 compared with over 2,500 three years before.
In theory, P2Ps provide information that helps match borrowers and depositors over the internet, charging a service fee for doing so. But in practice, some platforms – as was the case with Tuandai.com – collected deposits from individuals by offering annualised returns of at least 8 per cent, and then loaned money to cash-hungry businesses, such as property developers, at sky-high interest rates.
Tuandai.com “absorbed huge amounts of funds from the public” with an outstanding amount of 34.82 billion yuan as of March 2019, by guaranteeing high returns for investors under its financing and wealth management projects, which were launched without permission, according to a Thursday report by state TV broadcaster CCTV. The funds were mainly used for illegal manipulation of stock transactions, personal consumption and squandered, according to the report.
After its collapse in 2019, thousands of people protested outside the company’s headquarters in Dongguan to demand their money back.
