Local police in Guangdong and Liaoning provinces have cracked down an online art trading scam involving 1 billion yuan (5 million), while experts attributed the existence of such platforms to the shortage of proper investment channels.
Shenzhen police have arrested 371 people related to the online trading platform of art futures that took 1 billion yuan from some 8,000 investors, China Central Television (CCTV) reported Wednesday.
A total of 14 locations were raided in a special operation conducted in Shenzhen, Dongguan and Huizhou in South China's Guangdong Province and Shenyang, Northeast China's Liaoning Province on March 30.
According to Shenzhen's Nanshan district police, the company defrauded investors with claims it was trading futures of artworks that in fact it did not own.
"Our company … didn't have anything real (to trade)," a suspect surnamed Na told police, CCTV reported.
Na added that their tactics included encouraging users to make more deals, for which the company took commissions as high as 16 percent per deal, then kicking out any investors who made a profit off the platform.
"Most users on the platform lost money, which had been directed to personal accounts. Our investigation revealed the [platform] to be a sham," said Tong Yue, a police officer.
More than 8,000 investors have fallen victim to the scam since it started up in October 2016, police said.
"I put in more than 1 million yuan and only got some 300,000 yuan left. Then I cut my losses," said an investor from Shenzhen surnamed Dai.
Another victim, surnamed Song, said he was first given an unsolicited introduction to the company by a stranger through a QQ chat group.
"On these illegal platforms, the swindlers and the users are counterparties in trading, but the swindlers know all the information of the users, so the trading is very unfair, even more unfair than betting in casinos," Fang Xiaobin, a senior partner at Dacheng Law Offices in Wuxi, East China's Jiangsu Province, told the Global Times on Thursday.
Fang noted that around 300 billion to 500 billion yuan and a large number of people are involved in illegal futures exchanges each year.
"People should stay away from trading they do not truly understand," Fang said, adding that government should further publicize the risks of such illegal platforms.
"The development of these illegal trading platforms shows that investment channels for people in China are very limited," said Hu Xingdou, a professor of economics at the Beijing Institute of Technology.
A national campaign to clear illegal trading platforms started in January has found 1,131 such trading platforms in the country, with more than 300 involved with illegal futures trading, said CCTV.