Huang Sheng is the chairman of Chinese P2P lending platform Xitouwang. He has over 3 million fans on Chinese social media platform Weibo, and often published anti-America posts to attract like-minded followers. His posts have won him the nickname “Anti-America VIP.”
On July 13, he was suddenly arrested in Zhenshen on suspicion of illegal financial activities on his Xitouwang platform, reported CCP-backed Sina.com. Another shareholder and one senior manager were also arrested.
Public information shows that Xitouwang was established and went online on May 8, 2014. Huang owns 62 percent of it. On Feb. 28, 2020, Xitouwang was suspended from selling its online products. The platform still has $106 million in outstanding principal from lenders, involving more than 5,412 investors.
According to Xitouwang’s own data, the platform has been in operation for 2,642 days, with a cumulative transaction volume of more than $845 million and more than 548,000 active registered users.
According to statistics reported in the Chinese Epoch Times, from 2013 to 2015, the CCP’s most influential TV station, China Central Television, reported on and promoted P2P lending dozens of times, and state-level CCP leaders have spoken out in favor of P2P four times. Big cities including Beijing, Tianjin, Shenzhen, Nanjing, and Shanghai issued policies to promote the development of the internet finance industry.
Public data compiled by the Chinese Epoch Times indicates that there are 1,855 known online lending platforms in China. They have 344 million participants and a pending balance of about $145 billion. These platforms only account for 12.5 percent of the total number of online lending platforms.
A Favorite of the CCP’s Media
A Chinese blogger wrote that Huang has a different way of doing business. He specializes in marketing “patriotic” sentiments, attracting followers by “cursing the U.S.” for a long time and then directing them to invest their money in his P2P platform.
In March last year, when the entire world was hit by the CCP virus pandemic and many countries started to question the CCP over its coverup of the outbreak, Huang wrote an article titled “We Are Righteous and Don’t Need To Be Shy. The World Should Thank China” to defend the CCP.
This article was hailed by many official CCP media, including Xinhua, and was reposted en masse.
Some netizens counted the number of times Huang falsely stated in his articles that the United States “collapsed” or Japan “failed.” In three months, Huang said the United States had collapsed 20 times and Japan had failed 15 times. Although untrue, this didn’t stop Huang from repeatedly claiming that the West had failed miserably. Many of his fans believed the West really was a failure.
In every article, Huang also remembered to push his patriotic marketing by recommending his own P2P platform, which he eventually cashed in on with his fans.
Dr. Zhang Tianliang, a China affairs expert and a YouTube host, said in one of his videos that many people read Huang’s articles every day, and are attracted by his anti-America stance, and then become investors of his Xitouwang platform.
According to Zhang, people who can be attracted by Huang’s anti-America stance and statements are more likely to fall for Huang’s financial trap. So Huang was using his anti-America stance and statements to “screen” people who could be scammed.
Although a prisoner now, Huang has been highly sought after by the CCP media over the past few years, with special reports on him by Xinhua News Agency, CCTV2, Central People’s Radio, Phoenix TV, Shanghai TV, Securities Times, and China Securities Journal, among others.
Support from the CCP’s official media has given Huang’s P2P business several endorsements.
Crackdown After Promotion
According to a netizen’s hot post on the internet, the numerous bad debts in China’s state-owned banks threatened financial stability. In order to solve this problem, the CCP started to promote internet financing and allowed P2P platforms to develop in order to attract funds. Bad loans were repackaged as P2P products and sold to the public who didn’t know the truth.
After the banks got rid of the non-performing assets, the authorities then cracked down on the P2P platforms by forcing them to close. In 2018, many P2P platforms started to “voluntarily” exit the market.
Once the P2P platforms were closed, the victims had no way to get back their investments. The government cannot be held responsible for their losses and victims who sought to recover their losses were often cracked down on by the authorities.
Xitouwang announced on Feb. 12, 2020, that it would conduct a voluntary exit under the guidance of the regulatory authorities.
On March 16, 2020, Xitouwang issued a notice that it would close on March 29, 2020. On May 6, 2020, it announced its payment plan, which showed that it had 5,634 lenders, and $129 million in unpaid principal.
On Nov. 27, 2020, Liu Fushou, chief lawyer of the China Banking Regulatory Commission, said that as of mid-November, the actual number of P2P platforms operating across China had completely gone to zero.
This means that the trillions of dollars in debts owed by P2P platforms were also zeroed out along with them.
On May 21 this year, the Shenzhen police issued a notice to ban Huang and other senior management of Xitouwang from leaving China. In that notice, the police stated that Xitouwang still had $106 million in outstanding principal from lenders, involving more than 5,412 investors.