The Chinese police arrested 21 people for their involvement in the peer-to-peer (P2P) lender Ezubao online financial scam that is said to have lost its 900,000 investors $7.6 billion (50 billion yuan). This Ponzi scheme hosted highly attractive financial schemes, 95% of which were fake.

This online forum was set up in July 2014 by the Yucheng Group. The company had emerged as a player in the online investment industry in the last two years, a rise that could not be curbed by the Chinese regulations. It had become the country's fourth largest Internet P2P lender.

As EveningStandard points out, the investors were lured with the promise that the borrowers would pay back loans at 15% interest rates, which well exceeds the rates offered by the Chinese banks' wealth management products. Sadly 95% of the 'borrowers' never existed, leading to one of China's biggest scams. The fact that this was a large-scale Ponzi scheme has been confirmed by its former directors. When police raided the office, two investigators dug up almost 1200 account books that were hidden and buried underground.

The Yucheng chairman, Ding Ning, is clearly one of the chief suspects and one of the arrested men. He admitted that almost 800 million yuan were spent to buy corporate information to create the fake projects. The wealthy founder led a lavish lifestyle with the embezzled money and even presented the company president Zhang Min with a 130-million-yuan villa in Singapore and 500 million yuan in cash.

However, since the other finer details are still murky and none of the Ezubo officials were available for comment, it is not known whether the chairman has any legal representation for the case.

The sham website is no longer functioning, as per Reuters. Even the Yucheng Group's Beijing office appeared to have been shut down when the Reuters reporters visited the location. The Chinese police confirmed the fact that they have frozen and seized the assets of the company as well as of the entities that were linked to this case.

According to The Times of India, China has one of the fastest-growing wealth management product industries, which is worth almost $2.6 trillion. However, with this huge case of embezzlement, it only highlights the risks of this industry. While the returns seem to be highly lucrative which lure the investors, most products are sold without major monitoring or regulations and through online financial investment platforms and privately run exchanges.

Such illegal means of fund-raising is widely prevalent in China due to low bank interest, an unstable stock market and an unsound property market. This has gradually become a growing concern for the government who is struggling to bring some social stability at this moment.