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Staff wear protective masks at a Luckin cafe on April 3, 2020 in Shanghai, China.
Luckin Coffee said that regulators in the Chinese market are investigating its operations and that the company is helping with its work.
The Xiamen-based network issued a brief statement on Monday through its verified account on Sina Weibo, Platform equivalent to China’s Twitter, after multiple reports emerged that it was being investigated by Chinese regulators. Luckin had revealed on April 2 that several employees, including its Chief Operating Officer, Liu Jian, had made up to $ 310 million in sales.
The China Securities Regulatory Commission (CSRC) was said to have sent investigative teams to the company, according to a report by Tencent Technology, a news site operated by Chinese web giant Tencent Holdings. A separate report by the Wall street journal He said China’s business and commerce regulator, the State Administration for Market Regulation, visited the company’s headquarters on Sunday and demanded access to its accounts and other records.
It was not immediately clear what the investigations might have found or whether they had previously coordinated among multiple regulatory agencies. Luckin did not provide further details in his statement.
The company previously said it had formed a special committee to oversee an internal investigation related to manufactured transactions, and that it will publish additional information in due course. Its Nasdaq-listed shares have been suspended from trading since April 7, after collapsing 75% on the day of the announcement.
China’s securities regulators had previously condemned the company’s misconduct. In a statement posted on its website on April 6, the CSRC said it had “zero tolerance for securities fraud” and will facilitate related investigations based on applicable law.
Luckin had once positioned himself as a local Starbucks challenger. Founded in 2017, the startup managed to achieve a $ 561 million IPO in the US. USA In less than two years.
The company was said to have operated 4,500 stores in China, with plans to expand to up to 10,000 locations next year. He also used aggressive discounts, such as buying a cup and getting two for free, to attract local consumers, and saw rapid revenue growth, but also big losses.
