(Yicai Global) Dec. 30 -- Qian Zhilong, a former Alibaba Group Holding employee who now runs Mizhuang Asset Management, has turned himself into the police for illegal fundraising as his company struggles to reclaim the CNY1.3 billion (USD186 million) it distributed on behalf of peer-to-peer lenders.

Local authorities will investigate the platform's operator Hangzhou Xinhu Asset Management, police said in a statement yesterday.

The company said on Dec. 8 that it had already stopped receiving new deposits and would hold any incoming payments in a separate account. The website for Aicai Group, which has a 20 percent stake in Mizhuang and is led by Qian, is also down.

Xinhu, founded in 2015, had CNY1.3 billion in loans outstanding as of the end of November, according to data from Tianyacha. Some 12,000 creditors lent the money to 120,000 borrowers

Qian worked with Alibaba, China's largest e-commerce company, for 10 years starting in 2000. He helped form the Alipay team, develop Alibaba's key opinion leaders marketing platform Alimama and eventually resigned as general manager of the company's consumer department in 2010, according to online encyclopedia Baidu Baike.

Editor: James Boynton