Just before the Chinese New Year, the Communist Party of China (CPC) issued a State Council decree stipulating that losses suffered from participation in P2P fundraising shall be borne by the participants of the fundraising.
Screenshot of the State Council Decree No. 737 of the Communist Party of China
In recent years, P2P loans have frequently burst into flames, prompting a large number of financial refugees to defend their rights, and some financial refugees have been beaten and threatened with death by police.
On February 10, the CPC issued State Council Decree No. 737, “Regulations on Prevention and Disposal of Illegal Fund Raising”, cutting the responsibility of P2P supervision and stipulating that losses suffered due to participation in fund raising shall be borne by the participants of fund raising.
The regulations also prohibit enterprises, individual industrial and commercial household name and business scope containing “financial”, “exchange”, “trading center”, “wealth management “, “wealth management”, “equity crowdfunding” and other words or content.
However, the penalties for crowdfunders are extremely light. Fines for legal persons and principal persons in charge of the crowdfunding range from 500,000 to 5 million yuan, while fines for Internet intermediaries are only 100,000 to 500,000 yuan, and fines for supervisors are only 10,000 to 100,000 yuan.
In the early years, the Communist authorities advocated the development of inter-network finance, and it can be said that behind every P2P is the shadow of a government official, and with their participation and protection, P2P is rapidly degenerating into a Ponzi scheme with a spinning pool of capital, all with the principal of the back investors paying the interest of the front investors. In order to attract more money to join, they hired popular celebrities to endorse them and implanted advertisements into several media programs. The famous “eRentBao” case was advertised on CCTV.
Most of the slightly more well-known P2Ps are in the billions, tens of billions and even hundreds of billions. In 2017 alone, the volume of P2P financing was close to 3 trillion.
When the P2P platform financing volume reaches a certain size, some platforms with too high returns start to burst, the platform collapses, the boss is silently lost, directly run away, resulting in investors “lost all their money”, giving rise to countless financial refugees.
Hu Rong, the marketing manager of the “eRentBao case,” told the BBC, “Financial refugees are very poor, the government has no regular supervision, if the investment loss is recognized, but so many people were cheated out of their money, the regulator can not be blamed. The Hangzhou government, for example, advertises itself as the city of mutual funds on one side, and is largely absent on corporate compliance reviews.”
Previously, tragedies caused by P2P bursts have been repeatedly staged. On December 7, 2020, about 4,000 victims of the Nine Fortune platform went to Nine Fortune’s headquarters in Beijing to defend their rights, and police beat the people defending their rights, sprayed them with pepper water and pulled them onto a bus. The explosion of Nine Fortune caused 340,000 lenders to lose their money, involving RMB 30 billion.
On September 6, 2018, a 31-year-old woman in Hangzhou was victimized by a state-owned P2P website with nearly one million funds. The woman went to defend her rights and was violently suppressed by the authorities, leaving a suicide note and dying of grief and anger, which triggered a strong reaction from the public opinion. The single mother is just one of the millions of P2P victims.
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