Nasdaq-listed Chinese jeweler allegedly used fake gold to obtain $2.8 billion in loans

China • July 1, 2020, 3:30AM EDT
UPDATED: July 1, 2020, 3:36AM EDT
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Kingold Jewelry, a Nasdaq-listed Chinese jeweler, allegedly used fake gold as collateral to obtain 20 billion yuan (~$2.8 billion) worth of loans over the past five years.

Kingold is said to have used gilded copper bars to take out the loans from more than a dozen Chinese financial institutions, mainly trust companies, according to a report from local news outlet Caixin.

Dongguan Trust first discovered the fake gold when it went out to sell Kingold collateral earlier this year to cover defaulted debts. Minsheng Trust also found that the collateral kept by Kingold is copper alloy. Later, two more Kingold creditors reportedly found that the pledged gold is fake. 

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Kingold has denied any wrongdoing, per the report. Chinese authorities are said to be investigating the issue.

This is not the first time China has witnessed a gold-loan fraud case. In 2016, regulators reportedly found that 19 lenders were tricked to back 19 billion yuan ($2.7 billion) worth of loans with fake gold.

The Kingold case once again shows that even large financial institutions can be fooled by fake gold since it is hard to verify whether it’s real, especially in large quantities. Bitcoin, on the other hand, is cryptographically safeguarded and verifiable.

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.