(Yicai Global) Aug. 6 -- Shanghai police recently cracked an illicit foreign exchange trading platform called Fumano (Shanghai) Investment, which authorities suspected of fraud and which had sucked in over CNY750 million (USD106.3 million) over the past three years. 

More than 2,100 individuals and agents saw their investments in the outfit go gurgling down the drain. 

Using various deceptive means, the platform's founder Pan Fuping lured unsavvy investors with relatively poor risk tolerance from across China to invest huge sums, seducing them to wager on high-risk valuation adjustment trading under the guidance of so called "mentors" on the platform. Most of those who took the bait ended up losing their whole wad, evidence provided by sources close to the police shows. Even those who were able to log profits never got back one red cent.

Only CNY2.1 million was available on the platform's account as of Oct. 22 after hundreds of millions of yuan had already gone missing. Most investors had failed to ever see so much as a farthing flowing from the platform since its setup in 2016, Yicai Global concluded based on police materials. The company started to transfer money in bulk as soon as it had sufficient funds in hand to do so, its case file shows. 

Shanghai police arrested Fumano (Shanghai) Investment's actual controller Pan and several executives and analysts in December. 

Regulators must approve all foreign exchange, precious metals, crude oil and stock trading in mainland China, Wang Deyi, a lawyer at Beijing XunZhen Law Firm, told Yicai Global, adding the overseas license apparently granted to the company is thus invalid in mainland China. 

Such trading without authorization is the commission of the crime of illegal business operations, Wang said. The platform's operator may also be implicated if evidence of fraudulent acts such as manipulation is present, Wang added.

Fumano (Shanghai) Investment claimed to be the local agent for New Zealand-based investment brokerage Wincent International Information, but this turned out to have had its registration canceled in 2013, New Zealand public records show. 

Editors: Tang Shihua, Ben Armour