Luckin Coffee has agreed to pay a $180 million penalty to settle accounting fraud charges brought by the US market regulator.
While the CEO and COO take the fall, Luckin non-executive chairman and driving force behind CAR Inc., Lu Zhengyao, remains unscathed.
Luckin confirms sales fraud, two months after doubts about the disclosure accuracy by the Chinese Starbucks rival.
Luckin may be kicked off Nasdaq over fraud admission as board seeks to rein in shady listings. Delisting would put Luckin in the company of penny stocks.
The astounding fraud admission from beverage chain Luckin has put more US-listed Chinese companies in regulator and short-seller crosshairs.
Last week, the state market regulator fined Luckin and the companies that assisted its sales fraud. New Chinese brands are attracting investor attention.
The default followed almost immediately after Luckin disclosed that its head of operations had fabricated billions of RMB worth of sales for most of 2019.
If the deal proceeds, Luckin founder Charles Lu and his family will receive up to HK$1.37 billion, likely to be put toward the company’s cash crunch.
Luckin responded Monday to fraud allegations from an anonymous report publicized by short seller Muddy Waters on Friday.
Luckin is being investigated in the US for defrauding investors amid pressing concerns to recoup a dropoff in sales as a result of Covid-19.