Troubled Chinese beverage chain Luckin Coffee has agreed to pay a $180 million penalty to settle accounting fraud charges brought by the US market regulator.

The US Securities and Exchange Commission (SEC) said on Wednesday it levied the penalty against Luckin for defrauding investors. The company “intentionally fabricated” more than $300 million in retail sales from April 2019 to January 2020 by using related parties to create false sales transactions through three separate purchasing schemes, according to the statement.

“Luckin employees attempted to conceal the fraud by inflating the company’s expenses by more than $190 million, creating a fake operations database, and altering accounting and bank records to reflect the false sales,” the SEC said.

The SEC penalty followed four months after the Chinese market regulator imposed a RMB 61 million ($9 million) fine on Luckin and a group of affiliated companies for creating unfair competition by engaging in sales fraud.

Shares of the company, still available on the OTC market after delisting in July, surged 96% to close at $7.35 on Thursday, well below its historic peak of $50 per share reached in January when it was listed on the Nasdaq.

Some view the surge as a sign that traders expect a turnaround for the disgraced coffee chain. The company may be readying for a “better version of its former self” after business restructuring and fines, according to Luke Lango, analyst at InvestorPlace research firm.

Luckin’s credibility, however, has been badly damaged. Industry watchers hold Luckin up as an example of the deception possible when US investors trade shares of foreign companies where due diligence is difficult. Further, the accounting fraud has helped position Chinese tech companies in the crosshairs of regulators and short sellers.

Luckin Coffee will have paid a combined $190 million for its fabricated sales scandal to domestic and US regulators. The company will also be held accountable for charges from China’s Ministry of Finance, which overseas violations of China’s Accounting Law, stock investors, and owners of its convertible bonds. 

The company claimed it had $780 million cash or cash equivalents on its balance sheet as of late June.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.