China’s efforts to clean up its embattled peer-to-peer lending sector are behind the latest shock wave to affect trading in Hong Kong. Shares in Gold-Finance Holdings, a Chinese wealth management firm, tumbled as much as 70 per cent in the city on Tuesday. The decline came after police in China’s eastern city of Hangzhou said over the weekend its owner, Wei Jie, was in custody for suspicious illegal fundraising. The stock traded at 15.7 Hong Kong cents, slumping 67 per cent, before trading was suspended at 11.05am. Trading in the shares was also halted on Monday after media reports that Gold-Finance’s big shareholders and senior executives were being investigated by the police. The decline in Gold-Finance shares underscores the continuing scrutiny by China’s regulators of its P2P sector even after a crackdown over the past year, which led to the closure of thousands of lending platforms rife with fraud, defaults and embezzlement. Last week, the authority overseeing the internet finance industry in Beijing’s Chaoyang district asked senior executives of P2P firms in the area to not leave the capital pending business checks. Gold-Finance has been unable to contact Wei, also its chairman, and director Xu Liyun since the weekend and will closely monitor any information about them, it said in a statement filed to the Hong Kong stock exchange on Monday night. The absence of Wei and Xu will have a materially adverse impact on the daily operations and financial position of the company, it said in the statement. Gold-Finance was founded by Wei in 2008 and had assets worth more than 70 billion yuan (US$10.4 billion) under management in early 2018, according to its website. Its business scope ranges from financial product research and development to wealth management, as well as fund sales and services linked to high net worth clients, it said. A total of 1,215 P2P platforms were closed in China last year and two-thirds of these closures ended up in scams, according to industry data tracker P2P001.com. The outstanding balance of P2P lending contracted by about 30 per cent in 2018, it said.