We investigate how peer-to-peer (P2P) platform collapses influence investor risk preferences using trading data from a major Chinese brokerage. We find that such collapses induce local investors to become more risk-averse, as evidenced by a significant decline in order imbalance and a reduced willingness to allocate funds into their stock trading accounts. Within their portfolios, investors become more likely to sell high-risk stocks and less inclined to trade unfamiliar ones. These shifts in risk preference appear to be driven by deteriorating investor sentiment, rather than cognitive decline or reduced wealth.