Regulation needed

"I hope that the government can roll out detailed rules to regulate the P2P sector, to avoid future defaults," Chen told the Global Times.

Experts have said that further regulation is vital for the healthy development of the sector, as cases of default and bankruptcy could cause misunderstandings about the sector and scare lenders away from legitimate companies.

The authorities have already started to take measures to crack down on illegal fundraising. The China Banking Regulatory Commission (CBRC) is leading the effort to draft detailed rules for P2P firms, and new regulations will be unveiled soon, media reports said last week.

Liu Zhangjun, director general of the Office of Inter-agency Anti-illegal Fundraising Taskforce initiated by the CBRC, made clear that P2P platforms should act like an agent and are not allowed to attract deposits directly.

Search engine Baidu also announced on Monday that it would eliminate unqualified P2P websites from its company promotion platform.

Xiong noted that Chinese investors are often not that experienced, so they are more vulnerable to scams such as the case of China-Europe Winton Fund. "They should consult with lawyers before making any major investment."

"Online P2P investors should be very cautious when investing in projects offering annual returns higher than 24 percent, and they should also keep track of where the money goes," said Ma.