Chinese police on Tuesday took 21 employees of online financial company Ezubao into custody for allegedly stealing more than $10 billion from  millions of investors.

Ezubao, located in Anhui province, is barely one and half year-old company. It was founded by 34-year-old Ding Ning, who is among 21 people arrested.

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Ezubao was part of booming peer-to-peer lending industry, whose phenomenal growth in recent years was triggered by low interest rates on bank's saving accounts, the crashing stock market and a sense of doom that was prevailing over the Chinese economy. Ezubao was reported to be offering lucrative returns of between 9 per cent and 14.6 per cent, prompting millions of people across China to stash their hard earn money with the online financial company.

But with the busting of 'Ezubao scam' this morning, thousands of insecure investors found themselves queuing in long lines outside Ezubao's regional branches, hoping that they will be able withdraw their money from the company.

Many shocking information have also started to unearth as a preliminary investigation got off the ground. One reliable source told to the press that "Ezubao was a complete Ponzi Scam" and "more than 95 per cent of investment products it advertised were fake."

Another report from reliable sources suggest that company owner Ding Ning reportedly spent more than one billion Yuan on lavish gifts, including a 12 million Yuan ring for his wife.

The latest scam not only raises serious questions about Ezubao alone, but over other peer to peer financial companies, which have a sizeable presence across China - especially in rural areas where the banking system is not really well developed.

The latest scam is one among the many scams that have hit the Chinese economy in recent years. The Chinese economy reportedly lost whopping $33 billion last year due to financial scams.

Experts believe that regular occurrence of such financial scams is taking its toll on Chinese economy, which is currently going through one of its worst phases in history.  

TagsEzubao, china, Chinese Economy