Chinese authorities have arrested more than 20 suspects who are accused of involvement in a massive Ponzi scheme that allegedly swindled hundreds of thousands people out of billions of dollars.

The arrests reported Monday by state media relate to E-zubao, a peer-to-peer lending platform that promised investors attractive returns of as much as 15% when it launched a year and a half ago.

But the man behind the platform, Ding Ning, is now accused of gobbling up new capital largely in order to pay off existing investors, according to the official Chinese news agency Xinhua. Ding and 20 others have been arrested on suspicion of embezzling 50 billion yuan ($7.6 billion) from around 900,000 investors.

Authorities began investigating Ding's company, Yucheng Group, late last year. During the probe, investigators reportedly found 1,200 account books stashed in sacks buried 20 feet underground.

E-zubao has become one of the largest investment scandals to emerge from China's shadow-banking world -- a dark, unregulated patch of the country's financial system that offers murky investments with extremely high rates of return among other services.

There's often no transparency about where exactly investor money is going -- and the investment vehicles have vague names, such as "wealth management products." In some cases, they're sold through privately run exchanges or via online platforms, like E-zubao.

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Such services have proliferated as Chinese people look for places to invest their savings. For retail investors, there are few options to get more bang for their buck with domestic stock markets in turmoil and the property market struggling. Plus, these investments are at times marketed by large state-owned banks, which some investors see as an implicit guarantee.

Experts have long fingered China's big shadow banking sector as a potential problem for the world's second-largest economy. And now, as the country's growth is on the wane, concerns are increasing about the ability of borrowers to pay off debts.

Last month, economists surveyed by CNNMoney identified shadow banking as the number one risk to the health of China's economy, marking the first time it has topped the list since the survey's inception in 2013.

Yucheng Group couldn't be reached for comment Monday, as related websites and phone lines were down or disconnected.

--CNN's Serena Dong contributed to this report