Authorities in Beijing have initiated a criminal investigation into entities affiliated with CreditEase, placing company controllers in custody following a four-month payment freeze on two associated investment platforms.
According to an official notice issued by the Beijing Municipal Public Security Bureau, proceedings were launched to examine suspected unlawful conduct.
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Mandatory criminal measures have been enforced against controllers of the relevant enterprises, including Tang and Zhao, reported South China Morning Post.
Tang Ning, who founded CreditEase in 2006, serves as the controlling shareholder of both the enterprise and Yiren Digital, a Chinese digital lender traded on the New York Stock Exchange following its 2015 flotation as CreditEase’s consumer loan arm.
The police announcement followed CreditEase’s disclosure a day earlier regarding “a material default” across fixed-income-like products handled by two of its asset management platforms.
Investor disbursements across these offerings had been entirely halted on 22 May.
CreditEase linked the halt to contraction and sub-par financial returns within its inclusive finance and wealth management operations, the news publication added.
In a circular distributed to high-net-worth investors recently, the firm warned the “group may be balance-sheet insolvent, facing a significant debt shortfall”, citing an inability to divest “poor quality” underlying assets in open markets.
Responding to press coverage in May, Yiren issued a statement asserting operational separation and independent management from its majority owner.
The company verified that the defaulted vehicles had been marketed by “affiliates of the company’s controlling shareholder”.
In Yiren’s second-quarter earnings update released at the end of September, Tang said the company maintained “a disciplined approach” regarding its credit solution division, pointing to an “improvement” in later-stage delinquency rates.
Municipal law enforcement instructed affected clients to lodge case details to assist the formal inquiry and subsequent asset recovery, the report noted.
CreditEase stated that it intends to address product exposures in accordance with statutory requirements and pursue an accelerated, equitable disbursement to clients.
The entity added that loan-facilitation and other licensed businesses would continue to function stably, while steps are taken to expedite recoveries on non-performing loans and divest viable assets.
