(Yicai Global) June 1 -- Weidai, a US-listed internet financial company based in Hangzhou, is exiting the peer-to-peer lending sector as the city looks to put a stop to the practice by the end of this month.

Weidai will stop facilitating P2P lending before June 30, it said in a statement yesterday. The firm already ceased accepting new loans in February, and had around CNY7.2 billion (USD1 billion) in monies owed as of May 12.

Hangzhou was once a hub for China’s web-based financial firms, but local police have been shutting down P2P lending platforms for misappropriating public funds since 2018, with only Weidai, 51 Credit Card and a handful of other companies still in business.

All of them have committed to ceasing P2P lending by the end of this month at the request of the local government, 21st Century Business Herald reported an insider as saying.

The biggest case of P2P embezzlement in Hangzhou involved PiPi Internet Finance’s PP Fund, which lost some 37,306 investors CNY2.5 billion. The firm’s trial began in January and a ruling is yet to be announced.

China began strengthening P2P regulations nationwide in 2018 and plans to eradicate the sector within the next few years, according to a regulatory scheme published in December that hopes to turn the companies into small loan providers.

Weidai, which listed on the New York Stock Exchange in November 2018, did not reveal its post-P2P plans. Shares in the firm have fallen consistently since February 2019, largely a result of the general chaos among China’s P2P sector and increasingly tighter regulations. It closed at USD1.59 on May 29, down more than 80 percent from its USD10 issue price.

Editor: James Boynton