Ofo Denies Embezzling Around USD1.6 Billion in User Deposits
Liao Shumin
/SOURCE : Yicai
Ofo Denies Embezzling Around USD1.6 Billion in User Deposits

(Yicai Global) June 11 -- Beijing Bikelock Technology, the firm behind leading bike sharer Ofo, has denied misappropriating user funds worth over CNY10 billion (USD1.6 billion).

"We definitely did not misuse deposits," the company told Beijing Business Daily this morning, after reports suggested the company was misusing customer deposits, which they must pay before using the firm's shared bikes.

Ofo's financial data as of the middle of the month showed that the company was holding CNY3.5 billion, much less than it should have been, Chinese business news outlet Caixin Weekly reported recently, citing a personal familiar with the company's financials.

"The exact amount the deposit balance isn't known, but is definitely not less than CNY3.5 billion," Ofo insiders told Beijing Business Daily.

The firm should have about CNY16 billion in deposits, according to Sina Tech. The firm claims to have 200 million users: 30 million ride deposit free and the rest should have paid CNY99 (USD15.5) as collateral, it added, saying the figures suggest Ofo has embezzled well over CNY10 billion worth of users' money.

Ofo has been caught up in a similar situation before, when it and top rival Beijing Mobike Technology (Mobike) were accused of misappropriating CNY6 billion worth of deposits. The issue has been a major cause for concern over the past year, with a bunch of providers misusing funds and/or going broke, unable to repay users' money. The two top dogs deny exploiting the deposits, but general market belief is that if a mass of users were to request their money back, the companies would go bust.

Ofo started offering deposit-free rides across 25 cities last year, but earlier in 2018 trimmed that down to just five. Earlier today, Mobike announced that it would add 100 cities to its list of deposit-free riding zones.

Editor: James Boynton

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Keywords: OFO , User Deposits , Bike Sharing , Sharing Economy , Mobike