A major private conglomerate has sacked thousands of employees and suspended new lending at its peer-to-peer (P2P) lending platform, Caixin has learned from multiple sources with knowledge of the matter.

Shanghai Zendai Group, which operates a consultancy company that directed borrowers to P2P lending platform Laocaibao, terminated the contracts of staff at the consultancy, the sources said. Laocaibao will freeze new lending starting Tuesday after Shanghai Huarui Bank, where it deposited its customer funds, abruptly terminated cooperation with the platform, Laocaibao said in a statement.

At the end of July, Laocaibao had nearly 5 billion yuan ($708 million) in outstanding loans, according to its own website.

Chinese regulations require that companies providing P2P lending services deposit investor funds in a third-party institution to prevent fund embezzlement.

Read the full story later today on Caixin Global.

A previous version of this article misstated the relationships between Shanghai Zendai Group, the consultancy company, and Laocaibao.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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