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By Zhao Runhua / Apr 11, 2019 04:01 PM / Politics & Law

Photo: VCG

Photo: VCG

Beijing’s crackdown on illegal online lending platforms is entering a new stage, beyond concerns of financial risks into suspicions of organized crime and threats to public safety.

On Thursday, Zhang Wei, controller of Shenzhen’s well-known private financial services enterprise Shenzhen Zhongkechuang Financial Holdings Group, was arrested by a local public security unit for “suspicious gang crimes,” an official statement from Wednesday says.

A “criminal group” led by Zhang set up an online fundraising platform, called “88 Fortune,” and faked investment projects to collect funds from public investors, according to a Shenzhen public security unit. The group then loaned the money at illegally high interest rates, threatening borrowers with detentions, fake lawsuit documents, and gang-like confrontations.

The announcement came a day after a briefing held by the country’s special leadership group on gang and gang-related crimes.

During the briefing, documents drafted by legal and security departments, including the Supreme Court and Ministry of Justice, highlighted guidance on law enforcement in online lending cases. The documents also defined “soft violence (软暴力)” — a term for non-physical violence that threatens a person’s safety, including psychological health, which is considered common in recent online lending crimes.

Zhang's Zhongkechuang is also well-known for providing financial services for the wealthy. Shares of Suzhou Hesheng Special Materials, the company's affiliate listed on the SME board, plunged over 9% as of Thursday.

Related: Banking Veteran Urges Change in Online Lending Supervision

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