Shanghai Daily is reporting that global consultancy EY has gotten sucked into the collapse of peer to peer lender Jinxing Investments. According to the report, the Shanghai offices of EY has endured several protests becoming surrounded by angry investors who were under the impression that EY was somehow associated with the failed online lender. The report said EY denied any involvement in the company but apparently Jinxing had alluded to a “strategic cooperation” partnership with EY on its website – perhaps to instill confidence in investors. Jinxing has since removed the statement of any association with EY. Caixin reported that EY demanded “the online lending company remove all relevant falsified information.”
Jingxing, owned and operated by Shanghai Uprosper Asset Management, has been embroiled in scandal for many months. At the beginning of the summer, it was reported that the CFO of Shanghai Uprosper Asset Management announced that the founder and CEO of the company, Wang Jian was “nowhere to be found”. The online lender launched in 2015 promising safe returns for investors. Jian reportedly held events at posh hotels with local celebrities to buttress the illusion that all was well.
Blogger Mitchell Blatt, publishing on ChinaTravelWriter, documented the protests f from this past July where fleeced investors expressed their anger regarding the fraud. It has been estimated that approximately USD $60 million was stolen.
Online lending in China has been plagued with extreme acts of fraud. Some estimates place up to 1/3 of the thousands of platforms are bogus. Chinese officials have only enacted updated rules to reign in the rampant fraud with many industry observers expect hundreds of platforms disappearing in the coming months. The well-capitalized and operated platforms stand to benefit from the new regulatory approach as investors seek out better, more trustworthy returns.
China is the largest peer to peer lending market in the world. According to the Cambridge Centre for Alternative Finance, online lending in China registered a total marketplace/peer-to-peer consumer lending at $52.44 billion lent during 2015. For peer to business lending the total registered $39.63 billion. These incredible numbers are indicative of the shortfall of traditional banking firms ability to provide access to credit to both consumers and small business.