China’s ‘gold fever’ sparks US$1 billion scandal as trading platform collapses

The sudden demise of a major gold trading platform has rocked the southern Chinese city of Shenzhen, leaving tens of thousands of retail investors with combined losses totalling more than 10 billion yuan (US$1.4 billion), according to investors and domestic media reports.Chinese retail investors have rushed to capitalise on the unprecedented rally in global gold prices in recent months, leading many to put their funds into the online metals trading platform JWR.But as the gold spot price surged again over the past few weeks, a wave of customers tried to cash out their earnings, pushing the company into a liquidity crunch and leaving it unable to meet surging redemption requests.Hundreds of investors gathered outside the company’s offices in Shenzhen over the weekend to demand their money back, prompting a police intervention to maintain order, according to videos posted by investors on social media.Authorities in Shenzhen’s Luohu district announced on Wednesday that a task force had been set up to investigate abnormal business operations at JWR, financial news outlet Yicai reported.The company’s unpaid funds may exceed 10 billion yuan, according to estimates compiled by investors cited by Yicai.