The China Banking Regulatory Commission is warning the public about illegal fundraising activities that be involved in peer-to-peer lending websites.

The P2P lending websites, which provide personal unsecured loans, are getting popular in China as they match borrowers and lenders directly for better deals.

Liu Zhangjun, a CBRC official responsible for clamping down on illegal fundraising, said yesterday that the number of cases and amount of money and people involved are at a high level in China.

Chinese public security bureaus across 31 provincial areas found more than 3,700 cases of illegal fundraising, recovering 6.4 billion yuan (US$1.03 billion) in losses last year, the CBRC said. But it did not provide a breakdown figure on P2P cases nor the comparison for 2102.

"As Internet finance is developing rapidly, many illegal funding activities are moving from offline to online," Liu told a press conference in Beijing.

"Some lawbreakers used loopholes and blurred legal boundaries in new forms of financing to engage in online illegal fundraising activities actively."

The P2P websites commit an offense if it pools personal lenders' money before finding borrowers. The websites are required to check a borrower's identity. Website operators raising new capital to pay off existing debts, which works like a Ponzi scheme, are committing illegal fundraising, Liu said.