The Chinese government held a peer-to-peer (P2P) lending crackdown in the country. Following this, the founder of Zendai Group, Dai Zhikang, surrendered to the authorities after witnessing the downfall of his lending firm Laocaibao.

According to the South China Morning Post, Dai Zhikang and his company went under fire after the police investigated his firm following reports of illegal fundraising and embezzlement. News sites reveal the chairman resigned after being linked to P2P lending scams. Dai also admitted to accepting public deposits as well as operating without a financial business license.

Former chairman Zhikang turned himself in last Thursday, August 29, 2019. The Shanghai-based Zendai Group founder reportedly failed to meet payments to its current roster of investors via its online lending units, state the South China Morning Post. Besides Zhikang, 40 other people have been detained by the authorities for further questioning and investigation.

Financial Times revealed that representatives and spokespersons for the company admitted to embezzling funds raised for investors. This resulted in difficulties in paying investors.

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The two online lending units of the company were valued at a whopping 10 billion yuan. After the closure of the Laocaibao, Dai also laid off employees as a result of the government crackdown as well as the severing of ties with a custodian bank.

The decline and the arrest of Zhikang’s business come after the Chinese government’s new rules on the lending industry. Besides Zendai Group, other P2P firms have also shut down businesses or are expected to close down within the year.

Beijing, China has been tightening its reigns on the P2P lending sector to help restore the name and the glory formerly associated with the industry. In recent times, the Financial Times reports that most entities and institutions working in this sector have been associated and or accused of laundering and embezzling the money, thus failing to pay depositors.

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