the supervision system is imperfect and the information is asymmetric.

1. The supervision system is not perfect: when Internet finance just emerged, the supervision system has not fully adapted to the development of this new format, which makes some Internet funds look for loopholes in the supervision system and carry out regulatory arbitrage.

2. Information asymmetry: Because Internet finance is highly informational, digital and networked, it is often difficult for investors to obtain sufficient information to evaluate the risks of Internet funds. This makes it possible for some internet funds to attract investors by concealing information or misleading propaganda, thus achieving regulatory arbitrage.