On Sunday, China's Ministry of Public Security has launched an online platform to register the victims of investments and pyramid scams. The media reported that the website will help the government solve fraud cases and make investigations easier.
The Statesman reported that the new online policy was initiated after a crackdown on an online lending platform, Ezubao. Reports say that from the pockets of more than 900,000 investors, $7 billion was collected by Ezubao. The company pretends to be a legitimate investor, which collected money using the internet through the bait of promising returns.
According to the Business Standards, Ezubao financed the personal expenses of its directors and managed to return the initial investments with the money it collected from new investors. The fraudulent company diverted the collected money and did not return the correct amount to the clients.
Ezubao was founded in July 2014 and have gained popularity in China through a strategic and aggressive campaign, including spots on the state broadcaster CCTV. On February 1, an operation took place which led to the arrest of 21 individuals and has caused a great commotion in the country due to the popularity of Ezubao.
The new platform will register investments, including investors in illegal funding cases. This will be the basis through which investors who were scammed can receive compensation for their loss as reported by Xin Hua Net. The website will also help the government and the victims resolve possible new cases of fraud and scam that would occur in the future.
The company's broker and other related businesses are now under investigation for the charges of illegal fund-raising. The establishment had been in operation for about 18 months when it was finally shut down by the authorities last December. The government then released a statement saying that most investment projects featured on Ezubao's website were fraudulent.
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