Authorities have established a task force to intervene, with specific resolution plans under study.

In June, Chen Tao (pseudonym) discovered that returns on a gold wealth management product he purchased had abruptly stopped. Previously, after investing in gold through Jinyafu, he signed an entrustment contract with a recommended third party to invest in "cultural gold" sales, which promised annualized returns of 8% to 14%. In the first year, his return reached 10%. However, since June, payments ceased. By November, multiple investor communities reported widespread defaults on similar products.

Another investor, Ali (pseudonym), purchased a private placement product related to Jinyafu through a nominee holder, which also stopped payments in June. The company proposed several "upgrade plans" to placate investors, leading Ali to temporarily hold off on action.

Investigations reveal that since November, multiple Jinyafu-linked products have experienced large-scale defaults, with some promising annualized returns exceeding 10%, involving funds estimated at 7 to 8 billion yuan.

Some products, under the guise of "gold entrustment," guided consumers to sign gold purchase contracts without taking physical delivery, instead signing entrustment agreements with affiliates for fixed-return investments. Others were nominally private placements investing in equity or gold recycling projects but included implicit capital guarantees through repurchase commitments or supplementary agreements, potentially constituting "equity-debt hybrid" structures.

A recent visit to Jinyafu’s former headquarters in Shenzhen’s Luohu district revealed the premises largely vacated, with offices locked and leases terminated. The Shenzhen Yantian District Office for Combating Illegal Fundraising confirmed that a government task force is handling the case, with Jinyafu executives still in the country and resolution plans under discussion.

**Widespread Product Defaults** Public records show Shenzhen Jinyafu Holding Group Co., Ltd. (Jinyafu Group) is a prominent gold processing firm founded in 2006. Its website describes it as a one-stop precious metals service provider spanning cultural R&D, smart manufacturing, retail, recycling, refining, and logistics.

On December 19, inquiries confirmed that authorities estimate the involved funds at 7–8 billion yuan. Despite defaults emerging in June, Jinyafu deferred the crisis through three "upgrade plans": converting maturing projects into "smart gold store" franchises, obtaining joint liability guarantees from affiliates, or swapping debt for equity in Shenzhen Shangshan Intelligence Co., Ltd., with promised high returns.

For instance, the equity conversion plan offered investors 1.5x or 2x returns after 2–3 years, with implicit guarantees of 10% annualized returns if Shangshan failed to list or underperformed.

By November, defaults escalated. Court records show Jinyafu faces multiple lawsuits, including a financial entrustment dispute (Case No. 2025-Yue 0308 Min Chu 2881). Employees reported delayed salaries and unpaid August wages, while suppliers faced payment issues.

A lawyer handling investor cases noted a surge in consultations, covering limited partnerships, gold entrustment schemes, and nominee arrangements—all involving defaults.

**Risky Gold Entrustment Schemes** Materials reveal that Jinyafu’s "gold entrustment sales" model promised over 10% annual returns. Investors signed gold purchase contracts with Shenzhen Jinyafu Jewelry Co., then entrusted assets to Shenzhen Boyao Chuangjin Guarantee Investment Co. for "cultural gold" sales, with the latter linked to Jinyafu affiliates.

Promotional materials claimed the "Xinxiang Shicheng" cultural gold product achieved 40% gross margins through bank channels, though industry experts doubted such profitability.

The product offered flexible terms (6 months to 5 years) and options for physical gold or cash redemption, with returns scaling from 8.1% to 13.8% based on investment size and duration.

Boyao Chuangjin’s shareholders, Xie Huizhen (95%) and Qiu Rongyuan (5%), also co-controlled firms that partnered with Jinyafu. Qiu was reportedly a former Jinyafu employee, per a 2021 company post.

Shenzhen’s financial regulator warned in November about similar schemes where gold dealers entice consumers to sign purchase contracts, then entrust third parties for fixed-return investments without physical delivery.

**Private Placements and "Equity-Debt Hybrid"** Some investors participated in Jinyafu-linked private funds, structured as limited partnerships targeting gold recycling or equity projects. For example, Shenzhen Yiyue Industrial Investment LLP partnered with Jinyafu on gold recycling, projecting 22.18% annual profits, though market observers questioned feasibility.

Another fund, Shenzhen Yilang Industrial Investment LLP, invested in Shangshan Intelligence, with plans for a Hong Kong listing via backdoor acquisition. Jinyafu Commercial, the general partner, offered fixed quarterly distributions and repurchase options, effectively guaranteeing returns.

Legal experts noted such structures—combining fixed returns with repurchase guarantees—transform equity investments into debt-like instruments ("equity-debt hybrids"), violating partnership principles.

**"Group Buying" and Nominee Practices** Regulations limit private fund investors to 50 per fund and mandate high net-worth thresholds. However, Jinyafu allegedly circumvented these via "group buying" (pooling funds through nominees). One nominee agreement showed 50 backers investing through a single limited partner.

This practice, often organized by employees or agents, masked true investor numbers, potentially exceeding hundreds per fund. Some speculated Jinyafu replicated partnerships to bypass caps, though this remains unconfirmed.

**Potential Illegal Fundraising** Questions surround the funds’ registration status. While early products were reportedly filed with the Asset Management Association of China, later ones may have skipped compliance. Unregistered offerings, coupled with fixed-return promises to the public, could constitute illegal fundraising under Chinese law, meeting criteria for social outreach, profit inducement, and lack of licensing.

Investors were advised to verify licensure pre-investment and seek legal recourse if defrauded, including police reports, lawsuits, or complaints to financial regulators.