Lai is the owner of Hong Kong media companies Next Digital and Apple Daily. He is well known for his support for the pro-democracy camp.
According to the Global Times’s sources, the 71-year-old entrepreneur was arrested over alleged foreign collusion and fraud.
The South China Morning Post reported that the arrest took place on Monday morning at the tycoon’s home in Kowloon City District. Lai's two sons have reportedly also been detained. Along with Lai and his two sons, the CEO and the chief financial officer of the mogul's Apple Daily tabloid were arrested as part of the operation, the report read.
Meanwhile, the Hong Kong police said on Monday that they have arrested seven people under the national security law on suspicion of foreign collusion.
"The Police have been undertaking an arrest operation since this morning. At least seven local males, aged between 39 to 72 years, have been arrested on suspicion of collusion with a foreign country/external elements to endanger national security, conspiracy to defraud, and other offences", the press release said. It added that the "investigation is still underway and further arrests may be made".
Hong Kong political activist Joshua Wong has already condemned Lai’s detention.
The Chinese government enacted the national security law in Hong Kong in late June. The law adjusts security policies in Hong Kong to Beijing's perception of crime and punishment with regard to separatism, subversion, terrorism, and collusion with foreign countries.
The legislation has provoked a backlash from the Hong Kong opposition and the West. In protest, the United States has ended preferential economic treatment for the city.