Luckin Coffee has received notice from the Nasdaq stock exchange that the Xiamen-based coffee chain will be delisted. The announcement comes one day after a Reuters report claimed that the exchange will announce new rules that will increase scrutiny for new listings.

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Luckin announced the delisting on Tuesday, and said they will contest the decision. This will allow them to remain listed until the hearing panel comes to a decision.

If delisted, Luckin shares could still be traded through over the counter systems like the Over-the-Counter Bulletin Board or the pink sheets system, putting it in the company of “penny stocks.” However, relegation to these systems is a reputational blow that few companies recover from.

On Monday, Reuters wrote that Nasdaq plans to announce new rules that require non-US companies to have raised more than $25 million in their IPO, or one quarter of their market capitalization after listing. While the new rules don’t specifically mention Chinese companies, the timing suggests this is aimed squarely at them.

Read more: Luckin fraud admission leaves more questions than answers

It’s been a horrible year for the coffee chain:

  • In February, an anonymous report publicized by Muddy Waters raised serious doubts over Luckin’s financials.
  • In April, Luckin Coffee, once a darling of China’s O2O industry, admitted to sales fraud amounting to RMB 2.2 billion in 2019.
  • Last week, the company fired its CEO and COO over the fraud. But so far Charles Lu, founder and non-executive chairman, seemingly remains untouched.

John Artman is the Editor in Chief for TechNode, the leading English information source for news and insight into China’s tech and startups, and co-host of the China Tech Talk podcast, a regular discussion...