(Yicai Global) Aug. 2 -- Convenience store operator Linlijia Commerce and Trade is winding up all of its stores after its sole investor got busted for running a Ponzi scheme.

The Beijing-based firm sent a letter of notice to suppliers today to say that it was closing down its stores immediately as its coffers were empty following the demise of its only investor.

The backer, Shanlin Shanghai Financial Information Service, is currently under investigation by local police for organizing a pyramid scheme under the guise of peer-to-peer lending. The public prosecutor charged eight individuals for illegally obtaining deposits in April, state-owned news agency Xinhua reported at the time.

The bust was a big win for Beijing, which has been cracking down on risks in the financial sector, specifically P2P lending and internet finance, since last year. The three-year campaign, spearheaded by the new China Banking and Insurance Regulatory Commission under the iron fist of Chairman Guo Shuqing, dished out 1,662 fines worth CNY1.4 billion (USD205 million) to commercial banks and financial instructions in the first half.

As Shanlin's accounts were frozen, it was unable to inject cash into Linjia, a 3-year-old startup which relied on funds from the investor. Linjia's own accounts have also been locked up after suppliers turned to the courts to claim their dues, unable to contact legal representatives from the debtor to resolve the issue outside of the justice system.

The Japanese-style chain set up 60 stores within a year of beginning operations in July 2015, when Wang Zi, a senior executive at Seven-Eleven Beijing, convinced a team of 30 managers to resign en masse before he set up Linjia and offered them jobs. The firm brought in large amounts of capital from Shanlin early doors, helping it to grow quickly but also rack up a wad of debts -- which ultimately became unpayable when its sole investor pulled its shutters down.

Editor: James Boynton