The SEC is fining Luckin Coffee $180 million dollars for accounting fraud. It says Luckin overstated its 2019 revenue—and understated its net loss. But it hasn’t admitted or denied the charges.
The CEO said, “this settlement with the SEC reflects our cooperation and remediation efforts.”
The China-based rival to Starbucks fabricated its 2019 sales, which sent its shares plunging. After that, China’s securities regulator and the SEC started investigating.
An SEC official said, “public issuers who access our markets, regardless of where they are located, must not provide false or misleading information to investors.”
Luckin said its chief operating officer fabricated up to $310 million in sales.
In June, Nasdaq delisted Luckin because of the scandal.
The SEC alleges that Luckin Coffee colluded with third parties to create false sales. And in order to conceal the fake sales, they created a fake database of expenses of more than $190 million.
Because of the fraud, they were able to raise $864 million from debt and equity investors.
Luckin’s CEO, Jian Liu, has been suspended while the company carries out its investigation.