A court in Kunming tasked with unwinding a complex fraud case moved this week to sell off at least some remaining assets once belonging to the disgraced Fanya Metal Exchange. The judiciary's liquidation of more than 100 tons of rare earth elements marks the first significant public step toward settling the case in more than a year.
The Kunming Intermediate People's Court auctioned off Kunming Fanya Non-ferrous Metal Exchange's (泛亚有色金属交易所) reserves of antimony, terbium oxide and dysprosium oxide on Sunday, September 1, according to a Reuters report. The sale was staged on Chinese shopping website Taobao. The separate deals for the three metals each garnered the lowest minimum asking price, generating a combined revenue of 780.4 million yuan (US$109 million).
The court authorized the auctions in an attempt to recoup at least some of the estimated 40 billion yuan (US$6 billion) in investor assets that once made Fanya an attractive investment option. However, the company froze the entirety of its shareholder stock in the wake of "liquidity problems" announced in July 2015. No one has received any payments since.
Founded in 2011, Fanya was the only government-sanctioned stock exchange in China. It experienced massive capital inflows from more than 200,000 investors over its first five years of operation by offering a limited portfolio of futures options in 14 obscure elements. The accumulated money was then spent stockpiling obscure elements such as indium and germanium, as well as the three non-ferrous metals previously mentioned.
Public protests from investors followed the freeze in 2015, but it was not until a year later that Fanya's assets were seized and its CEO, vice-president and nearly two dozen other executives were arrested. That group was later charged and prosecuted for "embezzlement and sabotaging the financial order".
The metals sold off on September 1, weighed in at around 170 metric tons, the entirety of Fanya's supply of those three rare earth elements mentioned previously. How much of what other stockpiles remain under government lock and key is an open question. But if the recent auction represents even a fraction of Fanya's total supplies, bilked investors may never see even a fragment of what they originally put into the company.
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