Minneapolis police have turned over the investigation into an alleged sexual assault by Chinese billionaire Liu Qiangdon to local prosecutors, marking the latest development in a case that has riveted China.

The announcement on Thursday means local prosecutors will now decide if Mr Liu, the chief executive of e-commerce giant JD.com, will face criminal charges.

The 45-year-old Chinese entrepreneur, one of China’s richest businessman, was arrested on suspicion of rape and released from the Hennepin County jail in the US state of Minnesota earlier this month.

Minnesota’s Hennepin County Attorney Mike Freeman said on Thursday the local police department has completed its initial investigation and prosecutors will “review all of the evidence and make a decision on whether to bring charges” against the Chinese billionaire.

“Mr Liu has co-operated with Minneapolis law enforcement and is willing to co-operate further if requested,” said JD.com in a company statement issued earlier this month. The company has described the incident as an “unsubstantial accusation” following the chairman’s arrest and said that “police did not find any inappropriate behaviour”.

The alleged rape complaint involved Mr Liu and a Chinese student at the University of Minnesota and occurred during a business trip to the US. Mr Liu returned to China immediately after he was released from jail.

Shares in JD.com are down over 35 per cent for the year to date amid a broader souring of sentiment for China’s technology sector.

In the company’s 2014 prospectus, a provision dictates that Mr Liu’s incapacity to act as chairman would not include any confinement against his will, meaning that the founder would retain control even if he were to find himself in jail. 

The document also effectively prevents the board from taking any decision against Mr Liu’s wishes, as he must be present at all board votes.

Investors in the e-commerce group include Chinese internet giant Tencent, US retailer Walmart and Google, which in June paid $550m for a less than 1 per cent stake. Mr Liu holds 15.5 per cent of the company’s shares but controls more than 79 per cent of voting rights.

The case has sparked intense discussion online in China, including conspiracy theories that Mr Liu is the victim of a set-up designed to discredit a prominent tech company with potential to compete with US groups.

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