Originally reported by-The Block
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.
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.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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