When Cao downloaded the Qiangqiantong app, he certainly never expected it could ruin his life. So Cao invested the equivalent of $11,600 — his entire savings — with Qiangqiantong. And why not? The app claimed to offer amazing investment opportunities, with high returns and little risk. Instead, this June, the company shut down. Now Cao does not know if he will ever see his money again. The Washing Post reports:
Over the past decade, millions of investors sunk their cash into thousands of companies like Qiangqiantong (which roughly translates to Get Rich Quick) and others with names like Money Pig and Qianbao, or Wallet.
The promises were the same: steady growth, big dividends and a chance for investors to put financial worries behind. Investors lapped it up. It was once among the largest small-investor cash flood in the world, with as much as $200 billion riding on P2P dreams.
Some state-owned banks even helped facilitate payments, and government officials spoke of some of the P2P companies in glowing terms.
But since June, hundreds of upstart investment companies have gone bust — many falling victim to credit runs, risky bets or the same Ponzi-scheme unraveling that brought down fraudsters such as Bernie Madoff.