An online gold-trading operation based in Shenzhen has halted cash withdrawals and sharply restricted liquidity, leaving investors unable to retrieve funds and confronting steep haircut options. The platform, known as Jieworui (杰我睿), told users they could either accept a 20% lump‑sum settlement or take 40% of their capital back in 12 installments — choices that amount to forced losses for many and prompted local organisers to seal rooftops around affected areas as panic spread.
The business model that imploded was a privately run, high‑leverage “lock‑price” product sold through social media and local networks. Customers paid tiny deposits — reportedly as little as 20 yuan to lock the price on 1 gram of gold — to take leveraged positions for seven days; if the market moved in their favour they profited, if not they had to top up or be liquidated. With gold prices surging, the platform’s implicit leverage, estimated at 40–50x, became unsustainable when a unidirectional market exposed the operator’s balance sheet.
Investor groups estimate the unpaid exposure at well over 100 billion yuan and say tens of thousands of people may be affected. Shenzhen’s Luohu district has set up a working group to investigate; the platform’s owner, Zhang Zhiteng, remains in Shenzhen and has claimed he was “set up.” Business registration records show the company has only about 15 employees, suggesting a mismatch between customer scale and operational capacity.
Industry bodies have been warning against this kind of activity. The Shenzhen Gold & Jewellery Association explicitly described non‑deliverable, high‑leverage, bet‑style products as illegal and urged merchants to stick to real trade. That admonition comes after a string of recent failures in Shenzhen’s Waterbei jewellery trading hub, where similarly structured “lock‑price” operations led at least three middlemen to disappear last year after taking large prepayments.
Regulatory and legal questions now loom. Lawyers interviewed in Shenzhen say the scheme could amount to illegal fundraising, illegal business operations and even running an illicit betting operation — charges that carry criminal penalties. For already squeezed retail investors, the practical choice between a deep haircut and hope for recovery will be agonising, while authorities must weigh consumer protection against broader financial‑stability risks.
The collapse of Jieworui is not just a single fraud story; it is a symptom of how real‑asset markets and informal social‑media distribution have merged to create shadowy, highly leveraged products that evade standard market infrastructure. When commodity prices trend strongly, these private “derivatives” can generate rapid profits and equally rapid catastrophic losses, exposing gaps in regulation and investor understanding. Expect swift enforcement actions, calls for tighter oversight of online commodity trading and a reputational hit to legitimate dealers in Shenzhen’s famed gold market.