The $480 Million Scam Playbook: Chinese Microcap IPOs Are Bleeding U.S. Investors
Warning! GuruFocus has detected 7 Warning Signs with JYD.
The playbook? Simple. A company raises funds from private investorsChina Liberal raised $21 million from 30 insidersthen shares move quietly to U.S. brokerages. Promoters hype the stock online, targeting individuals with promises of a "sure thing." After the shares are dumped, prices crash. In China Liberal's case, seven traders from Malaysia and Taiwan were charged after allegedly unloading over 50 million shares for $480 million in profit. The DOJ seized $214 million, and trading in the stock was halted by Nasdaq on June 3. Meanwhile, NetClass rode the same waveits shares soared from $5 to $51 before collapsing to just above $2.
Regulators are under pressure. Finra had already warned back in 2022 that many of these ultra-small IPOsoften raising less than $15 millionshowed signs of manipulative trading. Nasdaq has since sped up delistings for companies trading under $1. But even with stricter rules, these schemes continue. The Justice Department has now prioritized tackling this fraud, while Meta says it's testing tools to block deceptive stock ads. Still, the damage is done. As trader Nathan Michaud put it, these setups are dangerous even for short sellersbecause once the squeeze starts, even the bears can get buried.
This article first appeared on GuruFocus.
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Time Magazine
18 minutes ago
- Time Magazine
Anas al-Sharif's Last Words Before Israeli Strike Killed Him
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It shared images of what it claimed was a Hamas roster list and injury record with his name on both. TIME has not been able to independently verify these claims. Al Jazeera condemned the killings, calling the attack a 'targeted assassination' and a 'blatant and premeditated attack on press freedom.' 'Anas and his colleagues were among the last remaining voices from within Gaza, providing the world with unfiltered, on-the-ground coverage of the devastating realities endured by its people,' the Qatari network said in a statement. Al-Sharif had faced threats and allegations of ties to Hamas from the Israeli army for nearly a year before his death, but they intensified following a broadcast in July in which he broke down crying while reporting on Gaza's hunger crisis. Israel Defense Forces (IDF) spokesperson Avichay Adraee accused him of crying 'crocodile tears' and of being part of a 'false Hamas campaign on starvation.' Al Jazeera rejected the claims as 'baseless'. 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CPJ Regional Director Sara Qudah accused Israel of 'murdering the messengers,' in a statement condemning the strike. 'Israel wiped out an entire news crew. It has made no claims that any of the other journalists were terrorists. That's murder. Plain and simple,' she said. 'It is no coincidence that the smears against al-Sharif — who has reported night and day for Al Jazeera since the start of the war — surfaced every time he reported on a major development in the war, most recently the starvation brought about by Israel's refusal to allow sufficient aid into the territory,' Qudah added. The CPJ has previously called the Gaza war the 'deadliest conflict for journalists ever documented.' Reporting on hunger Al-Sharif was a mainstay of Al Jazeera's rolling coverage of the Gaza war and one of its best known correspondents. In the video about starvation that drew the condemnation of the IDF, al-Sharif cries as a woman collapses from hunger behind him. 'They need only one meal. 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Reporting from the frontlines, they have faced the same losses and destruction as the communities they document, including the destruction of their homes and the deaths of loved ones. Al-Sharif's father, Jamal al-Sharif, was killed in a strike in December 2023 while he was praying, according to messages al-Sharif sent TIME in July. Due to the ongoing shelling, he was forced to bury his father in a schoolyard because he could not reach the cemetery safely. While on-air in October 2024, he found out about the deaths of his own relatives while reporting for Al Jazeera. The Israel-Hamas war was triggered after Hamas launched a terror attack on Israel on October 7, 2023, in which the group killed over 1,200 people and took around 250 hostages. Over 61,000 Palestinians have been killed since the start of the war, according to Gaza's Health Ministry. In the absence of independent monitoring on the ground, the ministry is the primary source for casualty data relied upon by humanitarian groups, journalists, and international bodies. Its figures do not differentiate between civilians and combatants and cannot be independently verified by TIME.
Epoch Times
18 minutes ago
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Beijing Is Desperate for Foreign Money
After years of making heavy demands on foreign investors and business interests, Beijing has awakened to its need for them and so is changing its tune. People walk on The Bund promenade along the Huangpu River during the passage of Typhoon Co-May in Shanghai, China, on July 30, 2025. People walk on The Bund promenade along the Huangpu River during the passage of Typhoon Co-May in Shanghai, China, on July 30, 2025. Hector Retamal/ AFP via Getty Images Commentary Beijing has learned one thing during the past couple of years, even before President Donald Trump's election: China's economy urgently needs foreign investment money and foreign business interests. For years, it seemed, Beijing acted as if it had all the advantages. Assuming, not incorrectly, that the foreign interests would tolerate a great deal to gain access to Chinese consumers, businesses, and Chinese markets generally, Beijing made stiff demands, among foreigners, imposing layers of red tape on U.S., European, and Japanese companies, refusing to actively enforce patent and copyright infringements, and demanding that every foreign company operating in China have a Chinese partner to which it had to disclose its technological and trade secrets. Story continues below advertisement Trump's primary complaints against China in 2018–19 highlighted such practices. The Chinese regime did not change then, but as foreign money has begun to look elsewhere, the authorities in Beijing have changed their tune. In June, it added tax incentives of up to 10 percent for foreign operations that reinvest their profits in China. This change has become all too evident in the past few weeks. During this rather compressed period, Beijing has announced steps to protect foreign copyrights and patents. Then just last month, seven key agencies in Beijing—including the National Development and Reform Commission, the Ministry of Finance, and the People's Bank of China—jointly issued what they called a ' Notice on Implementing Several Measures to Encourage Reinvestment by Foreign-Invested Enterprises.' Each of the 'several measures' sounds extremely friendly to foreign investment and overseas-based businesses. The new rules now require local governments throughout China to track and support foreign investment and expand the definition of what qualifies for such considerations. These new rules try to reduce the cost of foreign developments by granting easier access to industrial land, leasing, lease-to-own arrangements, and adjustable-term land transfers. Story continues below advertisement Regulators have been ordered to simplify and expedite approvals for projects as well as those that qualify for the previously announced tax breaks and do so for a wide range of earnings, including gains from foreign exchange transactions. Beijing's new friendliness surely comes in response to the shortfall of foreign investment over the past couple of years. In part because of the Chinese regime's past abusive behavior, but also official hostility to China trade in Washington, the European Union, and Japan, foreign businesses have begun to look away from China. In 2023, China suffered a net outflow of foreign capital . In the first half of 2025, foreign investment was 15.2 percent below 2024's reduced level. Strong investment upticks have occurred in e-commerce services, pharmaceuticals, aerospace equipment, and the manufacture of medical devices, but not enough to offset the general decline. The economic drag from these shortfalls has been undeniable, not only in China's export volumes but also more generally. Beijing has estimated that over the long haul, foreign investment enterprises, as they are called, have contributed between 20 and 30 percent of China's gross domestic product, or GDP. Doubtless, recent major concessions will draw some positive response from business in the United States, Europe, Japan, and elsewhere. It is unlikely, however, that foreign business or investment in China will return to what it was when the country was the primary destination for foreign investors. Story continues below advertisement For one, businesspeople the world over have memories of past abuses and are aware that Beijing's friendly approach today could easily change back should circumstances allow. They are also aware that a robust response to today's inducements will raise their exposure to China and make them that much more vulnerable should Beijing change its mind. Business managers have also become aware in recent years that there are opportunities elsewhere in Asia and Latin America that are, by comparison, more secure than in China. They will no doubt respond with caution. Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Epoch Times
18 minutes ago
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Shupai Yigou Collapse: A Ponzi Scam That Exposed China's Deeper Fault Lines
Shupai Yigou was not just a Ponzi scheme—it was a system-wide failure, where greed, blind trust, and lax oversight created the perfect storm. Commentary Shupai Yigou Digital Store, a Chinese digital investment platform, collapsed suddenly late last month, leaving hundreds of thousands of people across the country reeling. Based in Linyi, in China's eastern Shandong Province, Shupai Yigou marketed itself as an innovative blend of e-commerce and investing, but was ultimately revealed to be a massive Ponzi scheme, defrauding users out of over RMB60 billion ($8 billion). Story continues below advertisement What followed was a wave of chaos—mass protests, police crackdowns, and online censorship. But beyond the immediate financial disaster, the scandal exposed something far more serious: a crisis of trust, regulatory failure, and widespread public anxiety over financial security. A Simple but Devastating Scam Shupai Yigou lured users with a too-good-to-be-true promise: daily returns of up to 3.5 percent , and annual yields as high as 365 percent. Anyone could join with as little as RMB 1,000 ($140) , and early users did see small payouts—just enough to create the illusion that the system worked. But in reality, those returns were simply paid out using new users' money, making it a classic Ponzi scheme. To mask the fraud, Shupai Yigou disguised itself as a legitimate e-commerce platform, offering 'cashback' for shopping and displaying high-priced goods like luxury quilts or overpriced eggs— 30 for over RMB580 (nearly $80). But most of these goods were either fake, severely inflated in price, or simply never delivered. In the final days, users were forced to convert 90 percent of their 'balances' into these overpriced items—a last-ditch move to drain every cent before vanishing. Government Backing—or the Illusion of It What gave Shupai Yigou legitimacy in the eyes of the public wasn't just the slick app or fake products—it was the apparent endorsement from government institutions. In 2024, the Chinese communist regime's mouthpiece CCTV aired a glowing interview with company executives on its financial channel, portraying them as epitomes of the small-to-medium sized digital businesses. For many viewers, CCTV's coverage signaled state approval, and few questioned its credibility. But after the collapse, the network was accused of misleading the public and failing to do any real investigation. Local governments also played a part. The Luozhuang District government in Linyi designated Shupai Yigou as a ' key project ' in 2024, offering land rights, tax breaks, and even partnering with local universities. Wang Shaoqing , the founder of the company, was praised as an 'outstanding Party member of Linyi City' and was a deputy to the 17th Linyi Municipal People's Congress, among other official titles. The company claimed government ownership of 34 percent —though this was never officially confirmed by the government from public sources. What mattered is that many users believed it, and that belief lowered their defenses. In April 2025—just three months before the collapse—an official document from Linyi authorities, including the local district CCP committee, government, and police, stated that there was 'no evidence of the company being involved in illegal fundraising or pyramid schemes.' This statement, posted recently on X, gave investors a false sense of security. The Collapse and the Silence That Followed By July 2025, complaints about withdrawal issues were piling up online. Users couldn't access their funds, but the app kept accepting new deposits. On July 21, the company finally admitted it was under investigation for suspected pyramid activity. It claimed that the large volume of simultaneous withdrawals and limits on bank transfer transactions were the main reasons for delays of users receiving funds. Story continues below advertisement That same day, a large crowd of investors hurried to the company's headquarters, demanding their money back. But the offices were already abandoned. The next day, police moved in, using pepper spray and making arrests . Videos of the clashes were quickly deleted, and online discussion was censored. Some protesters—elderly, pregnant, or deeply in debt—broke down in tears. The tragedy was both physical and psychological. Many victims petitioned local and provincial governments, only to be turned away or ignored. Some were reportedly detained . The Real Problem: A Crisis of Trust and Economic Desperation At its core, Shupai Yigou wasn't just a financial scam. It was a reflection of deeper systemic issues in China today. Public trust was weaponized: Older users, with limited financial knowledge and heavy reliance on government and media endorsements, were the primary victims. They saw Shupai as a safe bet—not just because of its promises, but because they believed the state was behind it. Regulation failed at every level: Whether due to incompetence, corruption, or simple neglect, local officials and regulators missed—or ignored—all the warning signs. In fact, their support helped the scheme grow. When things fell apart, no one took responsibility. Story continues below advertisement People are desperate for financial security: Faced with falling asset values, stagnant wages, and limited upward mobility, many Chinese citizens are hungry for opportunities. Even those who suspected something was off stayed in, hoping to cash out before it collapsed. Final Thoughts Shupai Yigou's collapse shows that financial scams in China aren't going away—they're evolving. From peer-to-peer lending failures to fake blockchain startup s, these schemes now use high-tech packaging and trendy buzzwords like 'digital economy' to appear legitimate. Shupai Yigou was not just a Ponzi scheme—it was a system-wide failure, where greed, blind trust, and lax oversight created the perfect storm. Its victims weren't just investors—they were citizens who believed in a system that ultimately failed to protect them. Until that system changes, this won't be the last tragedy of its kind. Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
