Chinese authorities have arrested 21 people on suspicion of defrauding around 900,000 people of more than 50 billion yuan ($7.6 billion), state media reported, after an online peer-to-peer lender turned out to be a giant Ponzi scheme.

Ezubao offered investors annual returns of between nine percent and 14.6 percent on various projects, the official Xinhua news agency reported -- far more than currently offered by Chinese banks' wealth management products.

The platform, launched in July 2014, had amassed more than 50 billion yuan by December, said the report late Sunday, citing police as estimating 900,000 investors had fallen victim to the scam.

Investors were despondent on Monday, with one asking on China's Twitter-like Weibo: "Does our money just evaporate like that?"

But few comments were visible, leading to suspicions of censorship in a country where authorities impose strict controls to avoid social unrest.

Illegal fund-raising is widespread in China and often involves a large number of investors who have few investment options because of low bank interest rates, an extremely speculative stock market and uncertainties in the property sector.

Last October a payment crisis at state-managed Fanya Metals Exchange sparked protests in Beijing and Shanghai, with police detaining hundreds in the capital.

Ezubao was China's fourth largest Internet P2P lender, Chinese business magazine publisher Caixin Group said in a previous report.

The company fabricated most of the projects on its website and paid old debts with money from new investors, Xinhua said.

"Ezubao is a typical Ponzi scam," it quoted Zhang Min, president of its owner Yucheng Group and one of those arrested, as saying while in custody.

Yucheng's chairman Ding Ning said the company spent more than 800 million yuan buying corporate information to invent the fraudulent projects, the report said.

He also splashed out investors' money on a lavish lifestyle, including giving Zhang a 130-million-yuan villa in Singapore and 500 million yuan in cash.

State media regularly carry purported confessions by detainees, a practice strongly condemned by overseas advocacy groups as violating the right to a fair trial.

Police said that of the 207 companies to whom Ezubao claimed to have lent money, only one had actually borrowed from it.

"As far as I know, 95 percent of the projects on Ezubao were fake," it quoted Yong Lei, a risk controller at a Yucheng subsidiary, as saying.

Police raided the company, based in the eastern province of Anhui, after discovering that its executives were transferring funds and planning to flee, Xinhua added.

Some Internet users blamed investors' greed for enabling them to be easily taken in.

"Investors must sharpen their eyes facing various seductions. Never go after petty advantages and always remember there is no free lunch," said one posting.