A Shenzhen-based gold trading platform has collapsed after running what amounted to a leveraged betting operation with no physical backing, leaving over 150,000 investors scrambling to recover their funds.
The Jereh collapse — the largest in a recent wave of unlicensed gold platform failures across China — is now escalating into a standoff as victims refuse a repayment scheme that would pay them a fraction of their principal in exchange for waiving all legal rights.
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How Jereh worked
Jereh operated out of Shuibei, China’s largest gold and jewelry trading hub. The platform attracted a massive retail following by offering zero-fee gold exchanges, attractive buyback prices, and a product called “pre-set price trading” — where users could lock in the price of one gram of gold with a deposit as small as $4.
In practice, the mechanism functioned as unlicensed options trading. The platform took the opposite side of every user bet, with leverage reaching up to 40 times. No physical gold changed hands. When users profited, Jereh owed them the difference. When gold prices surged, those liabilities became unsurvivable.
The bank run
Withdrawals were first restricted around January 20, with daily limits capped at $69 or one gram of gold. Thousands of investors, many traveling from other provinces, gathered at the company’s Shenzhen office demanding their money. Scuffles with police were reported. The majority of victims are housewives and working-class investors, according to local media reports.
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Payouts far below expectations
The local government set up a special task force and announced on January 31 that Jereh had begun processing repayments after disposing of assets and raising funds. A third-party audit was commissioned, with authorities stating that the widely circulated figure of 13.4 billion yuan in unpaid funds was “significantly exaggerated.”
But for victims, the reality of those repayments has been grim.
The platform initially proposed two options: a lump-sum payment at 20% of the principal, or 40% paid in 12 monthly installments. In practice, actual payout ratios have fallen well short of even the 20% floor.
One investor from Henan who put in $5,100 submitted two separate redemption applications. The first returned an offer of $1,219. The second dropped to $244. Another victim with over $44,400 in cash, 5.2 grams of gold, and 1,000 grams of silver in her account was offered just over $2,800 — roughly 6% of her holdings.
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Customers who purchased platinum through the platform have been excluded from the payout calculation entirely, raising suspicions that Jereh never held the physical metal.
Criminal pardon clause sparks outrage
Adding to the backlash, Jereh’s redemption process requires victims to sign three agreements, including a “criminal pardon letter” — a document that multiple investors say would waive their right to pursue further legal action regardless of the final payout amount.
“Even after signing, there’s no guarantee you’ll actually get the money. And you give up the right to sue. For what — 1,700 yuan ($236)?” one investor from Zhengzhou told local media.
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Many have refused to sign, leaving them in a standoff with the platform. Several said they are preparing to pursue legal action independently.
Not an isolated case
Jereh is not alone. Multiple similar platforms across China have faced cash-flow crises in recent months as surging gold prices overwhelmed operators who lacked adequate hedging mechanisms and who bet against their own customers.
Jereh’s social media accounts have been deleted. Repeated calls to the company went unanswered, and attempts to reach its owner, Zhang Zhiteng, have been unsuccessful.
The Luohu District task force said it is continuing to register victim claims. The investigation remains ongoing.