Xue Charles Bi-chuen, 60, who commands a huge following on Sina Weibo, the Chinese equivalent of Twitter, was detained by police along with another 26 suspects in northern Beijing.
Popularly known as Xue Manzi, the famous Chinese-American angel investor was captured last Friday when he was soliciting a prostitute, a 22-year-old woman surnamed Zhang from Henan Province, state-run daily Global Times reported.
The crackdown followed repeated tip-offs from local residents since late August.
Police said that when they found Xue, he first claimed to be an American citizen. Zhang came to Beijing in May this year and had links with Xue since August. The police also said that since May, Xue has procured at least 10 sex workers.
Xue, who currently has over 12 million followers in social media, is an advocate for critical illness insurance in China and initiated a campaign to track down trafficked children and called for transparent details on pollution in the country.