In September this year, China’s Zhou Shiping, the “online lending godfather,” once highly thought of, had to appear in court. His team is accused of illegally raising $20 billion (139.5 billion yuan) and defrauding $2.35 billion from nearly 120,000 investors.

Zhou Shiping only managed a high school education. But he always takes himself as an inspirational example and advises ordinary people worldwide to work hard; as long as they are willing to endure hardship and strive, success is assured. 

According to Sina News, he is legally responsible for Hongling Venture Capital. The media cited reports that Zhou Shipping and 18 investors illegally raised the fund, causing 119,600 participants to lose $2.35 billion in principal.

For instance, Zhou Hui invested in Hongling in 2017. When the company was in turbulence, she quickly withdrew all her funds. In 2019, she reinvested, and her second sister-in-law took out over $100,000, which she entrusted Zhou Hui to invest. Unfortunately, the liquidation of Hongling began in April when her money was still tied up there. 

Sina News cited information from the official website of Hongling Venture Capital. The platform has so far had over 2.7 million lenders, and the cumulative loan amount has reached nearly $65 billion. However, the issue of Hongling’s debt has remained unresolved.

Sina News cited the investigation agency. Eighteen suspects, including Zhou Shiping, Hu Yufang, and Xiang Xu, were suspected of fund-raising fraud and illegally absorbing public deposits. 

The suspects used online loan platforms such as Hongling Venture Capital, Investment Treasure, and Hongling Capital Offline Financial Management from March 2009 to September 2021. They also used guaranteed interest and payments as baits.

These suspects used the funds to repay principal and interest, acquire publicly traded companies, buy and sell securities and futures, invest in stocks, and borrow outside funds. In addition, Zhou Shiping was buying properties and paying off personal debts.

Among the bank executives hired by Zhou Shiping, more than a dozen were involved in corruption.

Sina News reported that the lender could receive a rebate of 2% to 3% for the large-scale loan. That amount goes into Hongling’s risk control staff’s pocket.

For instance, some borrowers want to borrow $14.4 million or $29 million to achieve their goals. It means two or three million yuan becomes a kickback for Hongling’s risk control staff.

How Zhou Shiping became big brother of online lending platform

According to Sina News, Zhou was in the first batch of P2P platform entrepreneurs. He started working in a factory as early as 1989, but only for two years. 

Experiencing many ups and downs made Zhou Shiping realize two things. First, stock trading in China is too risky and is not a long-term solution for ordinary people. Second, the private sector needs to borrow capital, but its operation could be more stable.

Zhou Shiping wanted to turn private lending into sunshine. So, after paying off debts in 2007, he used the remaining money to establish Hongling Venture Capital. 

After the crisis, Zhou Shiping knew he needed to learn more about online lending and how to manage the risks. So he recruited a group of executives from banks and other financial institutions, hoping that these people could build a risk management team.

According to Sina News, these bank managers hail from traditional financial institutions. So they are familiar with the big lending business of banks. Therefore, Hongling Venture Capital was slowly transforming into a P2P giant, and Zhou Zhou Shiping became the big brother in the online loaning field.

Scammers with the mask of an honest person. 

To achieve such a large scale, it is undoubtedly indispensable for the public to trust the “honest person” persona of Zhou Shiping. Zhou regularly posts news, simple life stories, and inspirational stories on social media platforms.

As Sina News reported in 2017, Zhou Shiping is described as very willful and lively. He posts daily, laughs, and scolds in the forum, and no matter how busy he is, he will spare a lot of time to communicate with investors on the platform.

As a result, he successfully maintained his excellent reputation. But with more and more bad debts.

In July 2017, Zhou said he planned to liquidate the company in the next three years because the eight-year online loan had not earned any money. He had $115 billion in bad debt and $719 million in losses.According to Sina News, the company said lenders would repay all the loans in three years. However, Zhou was in criminal detention by July 2021.

Sign up to receive our latest news!

By submitting this form, I agree to the terms.