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Comment by protomyth | Hacker News Reader

Does this mean angel investing is illegal in China. I am not sure what "raising and pooling money outside the official system" really means.

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That's a good question. That seems like important context. What does the "official system" consist of, exactly, and why do so many entrepreneurs apparently raise funds outside of it?

Think of it as the wild west of financial system. People can skew the rules or laws by setting up saving and loan "banks" with promise of high return. Of course these are Ponzi scheme with the latecomers paying off the earlier ones, and eventually the "bank" collapses and the "entrepreneurs" simply disappear while many people lose their money.

So many "entrepreneurs" raising funds outside of the rule and law because they can't satisfy the financial regulations that protect the lay investors. And financial scams are lucrative?

She has "raised" hundreds of millions in this case. People losing the their life savings are furious. I'm sure in this case, these people have asked for her head. People who have had millions to start with are usually in the position of power, and they seem to get their wish this time.

Angel investing in US has the requirement of being Accredited Investors by law, so no you can't just angel investing willy nilly but follows the law (or "official system").

The comparable scale of punishment is another story; on the other hand a few people would wish Madoff was tried in a Chinese court for defaulting people.

Really? Is there anything similar in the UK? I don't believe there is - but I generally tend to believe there is less red tape around entrepreneurial activities in the US than the UK (we run businesses in both places).

In the uk angel investment is only typically allowed by high net worth or sophisticates investors (definitions below).

High Net Worth Investors

have an income in excess of GBP 100,000 per annum and/or have net assets (excluding primary residence) in excess of GBP 250,000 Sophisticated Investors

have made at least 2 investments in an unlisted company in the last 2 years have worked in the private equity sector or in the provision of finance for SMEs or have been in the last 2 years a director of a company with a turnover of at least GBP 1 million have been a member of an angel network or syndicate for the last 6 months

There's more to the story since behind door trials occur when officials get involved.

I believe it's more than that due to the wild speculation.

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