Troubled online lender offers to pay investors back with booze

Photo credit: Tagosaku

China’s P2P lending industry hasn’t been doing well recently, with fraud investigations, dying companies, and outside support drying up. But this story via Caixin really takes the cake:

A peer-to-peer lending website experiencing a liquidity crunch said it will settle all of its payment obligations to investors with bottles of an expensive Chinese liquor called Baijiu.

Police in the eastern province of Anhui detained Zhou Qinde, executive director and general manager of the P2P lending platform Chinatou.com, on June 1 after some investors complained about this unorthodox payment arrangement, the lender said in a statement on June 6.

State-run National Business Daily citing police documents said Anhui Tiandai Financial Consulting Services Co. Ltd., lender’s parent company, is suspected of “illegal fundraising” and police has started investigating the case.

As of May 15, Chinatou.com owed 230 million yuan to 1,850 investors, data from the website shows.

230 million yuan, or about US$35 million, will buy an awful lot of hooch. But Chinatou apparently isn’t even paying investors back with the good stuff – Maotai – and has instead bought its Baijiu from the far less famous Anhui Longshu Spirits.

Still, at least the company’s trying to do something to pay investors back. When Chinese P2P lending scheme Ezubao was revealed to be a Ponzi scheme, investors lost US$7.6 billion without recieving so much as a drop of beer in compensation.