And that's not all. Registration of all new companies with finance-related names was suspended nationwide in April, according to people familiar with the matter who asked not to be identified because they're not authorized to speak publicly. In Shenzhen, office building management now must submit contact information for employees of all finance industry-related tenants to the local security bureau. Local governments from Shanghai to central Henan province have put up new signs outside residential compounds to warn the public against illicit fundraising activities.

The government, which had been encouraging the flourishing of investment firms and online lenders in the past two years to give small businesses that can't get bank loans alternative funding -- and to expand investing options for millions of Chinese -- had largely failed to put regulations in place that would have prevented failures. The burgeoning ranks of peer-to-peer online lenders, or P2Ps, began opening storefronts on busy streets or in luxury office buildings to garner investment from the general public, hiring thousands of staff to sell products promising extraordinary returns. Other bricks-and-mortar firms sprang up offering wealth-management products with big payoffs, and many of those moved online, too, giving visibility to what was previously the nebulous and hidden world of shadow banking.