Chinese police have arrested the architect of a metals financing scheme along with 18 associates in a belated crackdown on the Fanya Metals Exchange, at the centre of a $6.4bn scandal.

Shan Jiuliang, Fanya’s founder, was previously targeted in a “citizen’s arrest” last August when angry investors surrounded his Shanghai hotel, stuffed him in a car and drove him to a police station. Police released him immediately. He disappeared and was presumed detained in December.

Fanya’s complex business model involved attracting deposits from investors at annual interest rates of up to 14 per cent. They also bought rare metals at above market prices in order to establish a benchmark for future sales at inflated prices, although in the event these never took place.