Fundraising Tactics of Zhongzhi Come to Light in First Criminal Verdict
Listen to the full version
A manager at a wealth management subsidiary of the collapsed Zhongzhi Enterprise Group has been sentenced to more than three years in prison for illegal fundraising — the first public conviction — tied to the downfall of one of China’s most prominent shadow banking empires.
Yu Xiaobing, who led the Shanghai office of Datang Wealth Management Co. Ltd., was sentenced to three years and five months in prison and fined 200,000 yuan ($28,000) for illegally collecting public deposits, according to a ruling by the Shanghai Pudong New Area People’s Court. The conviction stems from a broader national investigation into Zhongzhi-linked wealth management businesses that began nearly two years ago.
Between August 2018 and July 2023, Yu’s team raised 2.07 billion yuan by selling “directional financing products” to 359 investors, the court document said. While most funds were returned with interest, 414 million yuan in principal owed to 142 investors remains unpaid. The Shanghai branch of Datang Wealth was deregistered in September 2023, two months after Zhongzhi’s liquidity crisis became public.
Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.
Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.
- RELATED
- DIGEST HUB
Digest Hub
Back
- Yu Xiaobing, manager at Datang Wealth (a Zhongzhi subsidiary), was sentenced to 3 years 5 months in prison and fined 200,000 yuan for illegal fundraising.
- His team raised 2.07 billion yuan from 359 investors from 2018–2023; 414 million yuan remains unpaid to 142 investors.
- This is the first public conviction related to Zhongzhi’s shadow banking collapse; seized funds will be returned to investors.
- Zhongzhi Enterprise Group
- Zhongzhi Enterprise Group was a prominent Chinese shadow banking empire that collapsed, leaving a multi-billion dollar hole and impacting thousands of investors. It operated four wealth management companies—Hang Tang, Xinhu, Datang, and Gaosheng—which issued privately-placed financial products without regulatory approval. These companies illegally raised funds from the public by promising high returns to increase Zhongzhi's liquidity.
- Datang Wealth Management Co. Ltd.
- Datang Wealth Management Co. Ltd. was one of four wealth management companies established by Zhongzhi since 2011. Yu Xiaobing, who led its Shanghai office, was sentenced for illegal fundraising, highlighting the company's role in Zhongzhi's unregulated financial product distribution. Its Shanghai branch was deregistered in September 2023.
- Hang Tang Wealth
- Hang Tang Wealth is one of four wealth management companies established by Zhongzhi since 2011. Along with Xinhu, Datang, and Gaosheng, Hang Tang issued privately-placed financial products without regulatory approval, distributing them via various channels to raise funds for Zhongzhi's liquidity.
- Xinhu Wealth
- Xinhu Wealth is one of the four wealth management companies established by Zhongzhi since 2011. Along with Hang Tang, Datang, and Gaosheng, Xinhu Wealth was involved in issuing privately-placed financial products to the public without regulatory approval after 2017. These fundraising activities were primarily aimed at increasing Zhongzhi's liquidity.
- Datang Wealth
- Datang Wealth Management Co. Ltd. is one of four wealth management companies established by Zhongzhi Enterprise Group since 2011. Its Shanghai office manager, Yu Xiaobing, was sentenced for illegal fundraising, having raised 2.07 billion yuan from 359 investors by selling "directional financing products." Datang Wealth, like other Zhongzhi-linked firms, issued privately-placed financial products without regulatory approval, leading to a substantial amount of unpaid principal. The Shanghai branch was deregistered in September 2023.
- Gaosheng Wealth
- Gaosheng Wealth is one of four wealth management companies established by Zhongzhi since 2011. Along with Hang Tang, Xinhu, and Datang, Gaosheng, and other enterprises under Zhongzhi's control, issued various unauthorized privately-placed financial products to the public after 2017 to boost the company's liquidity.
- Hunan Guoheng Credit Asset Registration and Filing Center
- The Hunan Guoheng Credit Asset Registration and Filing Center was a channel used by Zhongzhi's wealth management companies, including Datang Wealth, to distribute "privately-placed financial products" to the public. These products lacked regulatory approval, and their primary purpose was to increase Zhongzhi's liquidity.
- Since 2011：
- Zhongzhi set up four wealth management companies: Hang Tang, Xinhu, Datang, and Gaosheng.
- 2012：
- Yu joined Zhongzhi.
- 2015：
- Yu transferred to Datang Wealth.
- After 2017：
- The four companies and related enterprises began issuing unapproved privately-placed financial products to the public.
- Between August 2018 and July 2023：
- Yu’s team at Datang Wealth raised 2.07 billion yuan from investors.
- Nearly two years before March 2025：
- National investigation into Zhongzhi-linked wealth management businesses began.
- July 2023：
- Zhongzhi’s liquidity crisis became public.
- September 2023：
- Shanghai branch of Datang Wealth was deregistered.
- May 2024：
- Yu was first asked to cooperate with the investigation and released on bail.
- July 16, 2024：
- Yu was formally arrested.
- March 2025：
- Prosecutors filed charges against Yu.
- PODCAST
- MOST POPULAR
Sign in with Google
Sign in with Facebook
Sign in with 财新