Chinese police detained Li Yonghui on Friday on suspicions that he illegally accepted public funds. Li is a Canadian national and CEO of Fincera, a New York-listed peer-to-peer (P2P) lending platform, which recently closed its operations in China. Police said they also detained the company’s lawyer and several other people. (Reuters)
Talking point: Chinese authorities have been grappling with how to regulate the P2P industry after years of it operating largely unchecked. Under the former hands-off model, the sector saw a surge in loan defaults, misallocation of funds and other fraudulent activities. The regulatory crackdown has been rocky, with rules varying by region and many local authorities not having the resources to properly police the sector. The regulator in the Hebei province in which Fincera operated was particularly poorly staffed, and asked all P2P firms to close in June and July. Li’s arrest follows those of two other Canadians in China since the RCMP arrested Huawei CFO Meng Wanzhou in Vancouver a year ago on an extradition request from the U.S. Two other Canadians charged for drug offences have since had their penalties escalated to death sentences, punishments Ottawa called arbitrary and unjust.