Rumors of Alibaba's Jack Ma getting arrested briefly wiped $26 billion from the e-commerce giant's market value

Jack Ma, the elusive founder of China's e- commerce company, was thought to be on the wrong side of the law for a brief moment on Tuesday.

Since Beijing cracked down on his companies in late 2020, Ma has stayed out of the public eye.

According to Chinese state television, police in the city of Hangzhou had been investigating a person with the name Ma since April 25.

The 86-word report lacked details, but investors were not reassured. Jack Ma, whose Chinese name is Ma Yun, was assumed to be the person in question. After the news broke, the share price in Hong Kong slid 9.4%, wiping out $26 billion from its market value.

Global Times followed up with a report that said the individual in question had three characters in his name. The person was born in 1985 and was identified as a director of hardware research and development at an IT company.

That made investors feel a bit less worried. The trading day in Hong Kong was just 0.83% lower after the Global Times report.

Tech investors have become more sensitive to signs that Beijing is closing in on any of the tech giants, as evidenced by the wild swing in the share price ofAlibaba.

In recent years, China has launched antitrust probes against tech companies, increased oversight of data security, and restricted consumers usage of internet and gaming platforms. China's tech firms are struggling to get users and consumers to spend more in a cooling economy.

Beijing has been cracking down on companies such as Alibaba. After Ma clashed with regulators in late 2020, Beijing forced the financial unit ofAlibaba to stop its IPO in New York. Authorities launched an investigation into the company for abusing its market position.

In recent months, Beijing has signaled that it is easing off on the campaign. On Friday, the government said it would promote the healthy development of the platform economy, which led to a surge in internet stock prices.

On Tuesday, the share-price fiasco showed that investors are still jittery.

An analyst told the Financial Times that China imposed a lot of "drastic policies" on the tech companies and now everyone is on alert.