China holds trial for scandal-hit Fanya exchange that owes over $6b to investors

A court in Kunming, capital of Southwest China’s Yunnan Province, has completed a twoday trial of officials connected with the scandal-hit Fanya Nonferrous Metals Exchange, which collapsed in 2015 owing more than 40 billion yuan ($6.03 billion) to investors.

The Xinhua News Agency said that 21 suspects – including Fanya’s chairman Shan Jiuliang – were in court on Saturday and Sunday on charges of embezzlement and the illegal collection of bank deposits.

According to the indictment, Shan and the other defendants were also accused of violating national financial management laws and regulations, and of causing “major economic losses.” A verdict will be reached at a later stage, Xinhua said.

Fourty-one lawyers of the defendants appeared in court. Families of the defendants, victims, lawmakers, journalists and members of the public witnessed the trial.

The Fanya exchange was launched in 2011 to stockpile 14 rare metals, including indium, and therefore to strengthen Chinese say over global prices. It also offered annual returns of 13.68 percent to individuals who invested in a financial product run by the exchange.

But all transactions and accounts were frozen in April 2015 amid “liquidity problems,” prompting protests outside the exchange in Kunming and at the offices of China’s financial regulators in Beijing and Shanghai, with investors accusing chairman Shan of running a Ponzi scheme.

Kunming police confirmed in 2016 that “illegal activities” had taken place at the exchange and that further investigations were underway.