Gold Rush Gone Wrong: Shenzhen's Jereh Platform Collapse Leaves 150,000 Investors Facing Pennies on the Dollar
The dramatic failure of a major gold trading platform in Shenzhen has exposed the perils of unregulated retail investment schemes, leaving over 150,000 individuals facing devastating losses and a contentious government-led cleanup effort.
The Jereh platform, operating from the heart of China's premier gold trading district in Shuibei, marketed itself as an innovative way for the public to trade gold. It offered zero-fee transactions, attractive buyback promises, and a "pre-set price trading" product that allowed users to control a gram of gold with a deposit as low as $4. This mechanism, in reality, functioned as a highly leveraged, unlicensed options market where Jereh took the opposite side of every customer's bet.
With leverage reportedly as high as 40-to-1 and no physical gold backing the trades, the platform's model became unsustainable as gold prices surged earlier this year. The resulting liabilities triggered a liquidity crisis. By late January, withdrawals were severely restricted, prompting protests at Jereh's offices and drawing intervention from Shenzhen's Luohu District authorities.
A government task force was established, which later announced that Jereh had begun a repayment process after asset disposals. Officials disputed widely reported figures of 13.4 billion yuan ($1.85 billion) in liabilities, calling them "significantly exaggerated."
For investors, however, the proposed settlement has been a bitter pill. Initial options offered a lump sum of 20% of principal or 40% paid over a year. In practice, actual payout offers have fallen drastically short, with some victims reporting offers as low as 6% of their account value. Crucially, the process requires signing agreements, including a so-called "criminal pardon letter," which investors fear waives their right to future legal recourse.
"This isn't a settlement; it's a coerced surrender," said one investor from Zhengzhou in local media reports. "They want us to sign away our rights for pennies, with no guarantee of even getting that."
The Jereh case is not isolated. It highlights a broader regulatory blind spot in China's financial landscape, where online platforms offering commodity trading have proliferated, often blurring the lines between legitimate exchange and speculative betting. The collapse underscores the vulnerability of retail investors—many reports indicate victims are housewives and salaried workers—to complex, high-risk products marketed as simple wealth-building tools.
Voices from the Aftermath:
"I used my family's savings, hoping for a safe hedge against inflation. Now, I'm explaining to my husband how I lost it all to a platform that wasn't even holding real gold." — Li Mei, 42, kindergarten teacher and investor from Hunan.
"The authorities moved too slowly. They knew about these unlicensed operations. This was a preventable disaster, and now the burden is on the victims to accept scraps." — David Chen, financial analyst based in Hong Kong.
"It's outright theft disguised as finance. Zero oversight, 40x leverage against your own customers, and then you demand a 'pardon'? This isn't a business failure; it's a criminal enterprise that was allowed to operate." — Marcus Tan, retired engineer and affected investor, speaking sharply.
"The task force is in an impossible position. Recovering full value is unlikely. The focus now must be on maximizing repayments and urgently closing the regulatory loopholes that allowed this to happen." — Professor Elena Zhou, financial regulation scholar at Shenzhen University.
Jereh's social media channels have been wiped clean, and its owner, Zhang Zhiteng, is unreachable. The Luohu District task force continues to register claims as its investigation proceeds, leaving thousands of investors in a painful limbo, weighing a meager guaranteed payout against the uncertain prospect of lengthy legal battles.