CHAPTER 527: CHAPTER 300 DOMINOES_2

Wu Dongyi’s voice lowered, "Mr. Chen, if you’re not in the business anymore, do you really not care about what’s happening in the circle?"

"What’s happened now?"

"There’s a group of youngsters who started an investigation company recently." Wu Dongyi explained, "Similar to Muddy Waters, they specialize in picking targets in the financial sector."

"Just yesterday morning, they published a research report on the Wealth No. 6 Fund on the Snowball forum, stating that the underlying asset of this financial product is a municipal investment bond."

"The report is quite professional, naming and shaming the product’s underwriting company and revealing the dirty tricks of MeiDi."

"Moreover, they dug deep, directly pointing out that Deng Xiong was the operator," Wu Dongyi paused, "and then, by last night, he was gone. Don’t you find that spooky?"

Chen Cheng’s heart skipped a beat, "That good?"

"Yeah, right? If you ask me, it’s these youngsters with brains who found such a track to fame that instantly made them a hit!"

Chen Cheng swallowed, "Send me the post to take a look."

"No problem~"

Wu Dongyi quickly sent the link over.

Chen Cheng clicked to open it, and the headline read boldly: "Wealth No. 6: A Meticulously Designed Ponzi Scheme?"

The post began by pointing straight to the core issue: Wealth No. 6 Fund, a financial product promising high returns with low risk, was in reality a ticking time bomb harboring colossal risk.

Its underlying assets were not the high-quality corporate bonds advertised, but a large amount of local government financing platform bonds, commonly known as "municipal investment bonds."

The report detailed the fund’s flow of funds, accompanied by accurate charts and data.

It indicated that most of the funds raised by the fund flowed into several financing platforms in economically underdeveloped regions.

These platforms’ financial health was worrying, with extremely high debt levels and severely inadequate debt repayment capabilities.

Once the local government’s fiscal revenues ran into problems, these municipal investment bonds would face a significant default risk.

Xia Yubing leaned in to look at the content on Chen Cheng’s phone, muttering, "Wealth No. 6..."

"What do you remember?" asked Chen Cheng.

"It seems to be from Longnan the year before last," Xia Yubing wasn’t sure, she glanced at the charts, "788 million..."

She fell silent for a moment, "Right! That’s the one! Longnan City Investment packaged a batch of municipal investment bonds at the time, with a deal worth 788 million, promising an annual return rate of 12% for a duration of three years."

"Mr. Jin had found..." Xia Yubing corrected herself, "Deng Xiong had gotten several trust companies to break down this debt package."

Chen Cheng’s expression grew grave as he continued reading.

The report not only analyzed the underlying assets of Wealth No. 6 in detail but also its operating model.

Deng Xiong used the 788 million in municipal investment bonds as the base asset, designing a three-tier structure of financial products consisting of senior, mezzanine, and junior tranches.

Senior tranche products had lower returns and lower risks, mainly aimed at ordinary investors with weaker risk-bearing capabilities;

Mezzanine tranche products had moderate returns and risks; junior tranche products had the highest returns, but also the highest risks, usually held by Deng Xiong himself or investors closely related to him.

Through this tiered design, Deng Xiong effectively amplified leverage, using less of his own funds to pry a larger scale of investment.

Then, he broke down the three-year bonds into various investment products with different terms, such as 6 months, 1 year, 2 years, and so on.

Funds raised from short-term products were used to pay the principal and interest of the maturing products, thus creating an illusion of abundant funds and smooth operation.

This mismatch of maturities could maintain the cash flow chain in the short term but also planted a massive liquidity risk.

If new funds could not be replenished in time, the entire cash flow chain would break.

Then, these financial products were sold through multiple channels such as banks, trusts, and private funds, using different product names and investment strategies to conceal the real source and destination of the funds.

"Wealth No. 6 is one of the parts split from this 788 million," Chen Cheng murmured.

After examining this detailed report, he finally understood the back-end processes that Jin Baogen, Wen Shulin, Chen Jin, and others had kept tight-lipped about.

Plus, with the two front-end, bond issuing processes he had experienced himself, the entire bond issuance workflow gradually became clear in his mind.

"A report took his life?" Chen Cheng wondered in silence.

But the next second, as he scrolled down, the text on the screen truly shocked him.

This research report from "Guns & Roses Consultancy" clearly stated that the batch of municipal investment bonds of Longnan City Investment had no real projects supporting them from the beginning; it was a carefully crafted scheme.

The raised funds were not used for the construction of any physical projects but were diverted elsewhere.

The report also listed several projects suspected of embezzlement, supplemented with relevant evidence.

For example, a project claiming to be a multi-hundred-million-yuan "Eco-Tourism Resort" actually turned out to be nothing but barren land;

Another project supposedly attracting tens of millions of yuan in "High-Tech Industrial Park" investment, was in reality merely a shell company.

All the evidence was gathered with photos and videos, as well as recorded interviews conducted after visiting the locals.

Upon reading this, Chen Cheng’s face turned ashen.

He knew that Deng Xiong was doomed.

And after the truth was reported, the netizens’ reactions were explosive.

The comment section below the post had completely fallen into chaos, filled with emotions of anger, panic, and despair.

"I invested 500,000 yuan into this and now it’s all gone! I’m going to sue them!"

"How is this a financial product? It’s clearly a scam! We’ve all been deceived!"

"All of my savings were invested, what should I do now? I don’t want to live anymore..."

"Oh my god, that’s my retirement money! What am I going to do?"

"We demand severe punishment for Deng Xiong, we demand justice!"

Aside from the victims’ cries and rage, there was also some relatively calm analysis:

"What’s the background of this "Gunflower Consulting"? How could they dig up so much insider information?"

"It looks like a big storm is brewing, I wonder how many people will get dragged into this."

"What kind of background does Deng Xiong have to get his hands on these resources and to engage with so many companies?"

...

In the comments section, some even started to form "rights protection groups" and posted group QR codes.

Xia Yubing scanned it with her phone and it was already full, with "Group 6" displayed on the screen.

Chen Cheng put down his phone and thought carefully about the course of events, "I’m afraid this is only the beginning."

"More troubles?"

Chen Cheng told Xia Yubing: "This report doesn’t mention any third-party selling agents like CGG or LinkedIn."

"And what you just said, these products were all from entities like CGG, do you think the clients could get their money back if they asked to cash in on these products?" Chen Cheng pointed directly at the crux of the matter.

Xia Yubing’s face turned pale and with trembling lips, she said: "If... If the underlying assets are all fake, then... they definitely won’t get their money back..."

She took a deep breath, trying to calm herself, and continued to analyze: "These small third-party vendors don’t have strong financial resources. They source their inventory from large institutions like CGG and LinkedIn by marking up the prices to make a profit. Now that the underlying asset has imploded, they don’t have the ability to cover the shortfall."

Chen Cheng nodded, Xia Yubing’s analysis aligned with his thoughts.

It’s like a domino effect; once the first one falls, the rest will fall in a chain reaction.

Chen Donghai stood up, Chen Cheng looked up, "What’s the matter?"

"Mr. Chen, please rest assured. I won’t..."

"Sit down." Chen Cheng interrupted Chen Donghai, but Chen Donghai’s legs seemed to be leaden; he just couldn’t sit down.

"Sit!"

Chen Cheng’s fury startled both Xia Yubing and Tong Jialu, neither of them daring to even breathe too loudly.

Chen Donghai also got intimidated and sat down stiffly.

"We haven’t gotten to you yet, have we?" Chen Cheng stared at him, "I told you not to panic, what are you doing?"

"Wife, what do we do now?" Xia Yubing asked the critical question, "Do we still sign this contract?"

After she asked, she subconsciously glanced at Chen Donghai; after all, his name was the one in black and white on the contract.

Chen Cheng was also weighing his options.

After a moment, he had an answer, "Whether we sign or not is not up to us."

He looked at Chen Donghai, "It depends on the other party."