As the first Chinese peer-to-peer (P2P) lending platform to go public in the United States, Yirendai drew a lukewarm response during its first day of trading on Friday, with shares slumping by as much as 16.5 percent down to $10 apiece on its debut day.

Yirendai shares were dumped by some investors because the unregulated P2P market environment and severe crisis of confidence pose great risks in the industry, a security analyst said, according to a Sohu report on Monday.

Since their introduction in 2006, P2P lending platforms have grown rapidly in China on the immense demand for credit from individuals who find it difficult to borrow money from traditional Chinese banks.

Using P2P, ordinary Chinese lend money to unknown people without going through a bank for higher returns, as investment channels are still relatively limited in the country.

But the sprawl of P2P lending platforms in China was also accompanied by frauds, such as sudden website shut-downs, making it difficult for individual lenders to withdraw funds.

Citing market data, the Sohu report said 1,248 P2P lending platforms were found with “issues” in China as of the end of November, accounting for 34.5 percent of the market.

In the meantime, a large number of loans to people with lower credit scores has also embedded huge risk, said the report. Yirendai has classified its borrowers into four categories: A,B,C, and D. People with the best credit score, class A, are charged an annual rate of 16.9 percent, while an interest rate 39.5 percent is charged to those with the lowest credit score, class D.

During the first nine months of 2015, 78.3 percent of total loans on Yirendai were lent to Class D borrowers, said the Sohu report.