Chinese authorities have opened a criminal investigation into wealth management firm CreditEase, escalating scrutiny of the company after it suspended redemptions on investment products worth 30 billion yuan (about S$5.7 billion).
Police in Beijing’s Chaoyang district announced on Oct 12 that they had launched the investigation and imposed criminal coercive measures on the company’s controller and several other suspects.
The suspects include a 53-year-old man surnamed Tang and a 51-year-old woman surnamed Zhao, according to the police statement. Authorities have urged affected investors to register their cases with the police and cooperate with efforts to recover assets and minimise potential losses.
Investment withdrawals suspended since May
The investigation follows CreditEase’s abrupt suspension of redemptions in May on quasi-fixed-income investment products worth 30 billion yuan, according to a report by Chinese financial media outlet Yicai.
In a letter sent to investors, the company said it had commissioned an independent third party to audit its assets and liabilities.
Preliminary financial due diligence reportedly indicated that CreditEase Group could be insolvent, with a substantial gap between its assets and debt repayment obligations.
The findings raise concerns about the potential scale of losses and whether affected investors will be able to recover their money. The final outcome will depend on the investigation and the assessment of the company’s financial position.
CreditEase had not immediately responded to Reuters’ request for comment at the time of publication.
From peer-to-peer lending to wealth management
Founded in Beijing in 2006, CreditEase entered the peer-to-peer lending market through Yirendai in 2012. The platform listed in New York in 2015, becoming the first Chinese peer-to-peer lender to go public overseas.
Following the collapse of numerous peer-to-peer lending platforms in China in 2018, CreditEase shifted towards a loan facilitation model, helping banks and other financial institutions extend credit. It also expanded its wealth management business, offering investment products to high-net-worth clients.
However, financial pressures have also affected its US-listed arm, Yiren Digital. The company reported a net loss of 944 million yuan in the first half of 2026, compared with a net profit of 605 million yuan in the same period a year earlier.
Renewed scrutiny of China’s shadow banking sector
The CreditEase case comes as Beijing continues efforts to contain risks in the shadow banking sector, where lending and investment activities outside traditional banking channels can create financial vulnerabilities.
Authorities have sought to address complex debt structures and failures involving financial groups, including Zhongzhi Enterprise Group, whose liquidation was ordered by a Beijing court in April.
For CreditEase investors, the immediate concern is whether suspended redemptions will eventually resume and how much of their investments can be recovered.
The criminal investigation marks a significant escalation in the case, but the allegations and the company’s ultimate financial position will need to be established through the relevant legal and financial processes.
