The 21 people worked for Ezubao, a peer-to-peer lender widely described in Chinese state media as a Ponzi scheme.
Ezubao is believed to be China's largest such online financing business.
State media said investigations had found more than 95% of the investment offerings on the site were fake.
Chinese television broadcast apparent confessions by two former employees of the company, that was based in Anhui province.
Ezubao was launched in 2014 by Ding Ning, the chairman of holding firm Yucheng Group. He was among those arrested, reports said.
China's growing middle class has increasingly been attracted to online investment schemes as people seek to quickly increase their wealth.
But authorities have been struggling to regulate the wealth management industry, estimated to be worth more than $2.5tn.
A Ponzi scheme is much like a pyramid scheme and is viewed as a fraudulent investment operation that offers unusually high returns on short term investments. Some of that money pays fake returns to other investors.
They are named after Boston fraudster Charles Ponzi who set up schemes in the US in the 1920s.
Chinese authorities have arrested 21 people involved in an online finance scheme which is suspected of defrauding 900,000 investors of about 50bn yuan ($7.6bn; Â£5.3bn).