(CBN Global) April 27 -- Beijing has called on financial regulators to crack down on all illegal fundraising platforms, according to a leaked joint statement released by China's 14 authorities.
The 87 pages joint statement of China's 14 regulators and judicial authorities leaked on Wednesday said that strict precautions must be taken to prevent future illegal fundraising cases, and that the government would work to educate the public better about such financial risks, after China's largest online peer-to-peer (P2P) lender was found to have collected more than CNY50 billion (USD7.6 billion) for fake investment projects.
The case has underscored the risks created by China's fast-growing USD2.6 trillion wealth management product industry. Many products are sold through loosely regulated channels, including online and offline financial investment platforms and privately run exchanges.
Detained executives from the parent company of Ezubao, once China's biggest P2P lending platform, have said the firm was a Ponzi scheme that advertised products promising annual returns of up to 14 percent, attracting CNY50 billion from more than 900,000 investors.
More than CNY400 billion had been raised by more than 3,600 P2P platforms by the end of last November, according to the China Banking Regulatory Commission. More than 1,000 of those firms were problematic, the leaked document said.
CBN earlier reported that according to its calculation, the amount of money collected via illegal fundraising reached a staggering at least CNY200 billion last year.