An online fundraising attempt by a Chinese media startup company has triggered widespread controversies over possible violation of Chinese securities laws.
The company, Make.V, raised about 12 million yuan ($1.9 million) from 1,191 purchasers who bought membership cards between Jan 9 and Feb 3 on Taobao, one of China's largest e-commerce platforms.
On Tuesday, the website urged Make.V to stop selling the membership card because it violated national laws and regulations, according to Zhao Nige from Taobao's public relations department.
Zhao did not say what regulations the product violated.
Zhang Weiguang, a Shanghai-based lawyer who specializes in securities law, said Make.V risked committing illegal fundraising given that it collected money from the public and the number of subscribers surpassed 50.
Zhu Jiang, chief executive officer of Make.V, said he came up with the idea to raise money from the online platform after half a year of efforts seeking investors across the country turned out to be "a wild goose chase", and the startup team could not afford to wait.
"We are actually selling a service pack, and the money collected will help the company operate properly before we earn our first revenue," said Zhu.
According to the contract sent to members along with membership cards, anyone could subscribe to 100 shares of Make.V by buying a 120-yuan ($19.30) membership card.
Members with a subscription can have access to e-magazines and some video programs.
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