BEIJING: Chinese authorities have arrested 21 people on suspicion of defrauding around 900,000 people of more than 50 billion yuan ($7.6bn), state media reported, after an online peer-to-peer lender turned out to be a giant Ponzi scheme.

Ezubao offered investors annual returns of between nine per cent and 14.6pc on various projects, the official Xinhua news agency reported — far more than currently offered by Chinese banks’ wealth management products.

The platform, launched in July 2014, had amassed more than 50bn yuan by December, said the report late on Sunday, citing police as estimating 900,000 investors had fallen victim to the scam.

Ezubao was China’s fourth largest Internet P2P lender, Chinese business magazine publisher Caixin Group said in a previous report.

The company fabricated most of the projects on its website and paid old debts with money from new investors, Xinhua said.

“Ezubao is a typical Ponzi scam,” it quoted Zhang Min, president of its owner Yucheng Group and one of those arrested, as saying in custody.

Published in Dawn, February 2nd, 2016