Chinese coffee company, Luckin Coffee, said China’s market regulators are looking into its operations—and the company is assisting with their work
The company previously said it had formed a special committee to oversee an internal investigation related to the fabricated transactions, and will release 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.published on its website on April 6, the CSRC said it had “zero tolerance toward securities fraud,” and will facilitate related investigations based on applicable laws.
Luckin had at one time positioned itself as a local challenger of Starbucks. Founded in 2017, the startup had managed to pull off a $561 million U.S. IPO in less than two years. The company was said to have operated 4,500 stores in China, with plans to expand to as many as 10,000 locations next year. It also used aggressive discounts–such as buy one cup and get two for free–to attract local consumers, and booked fast revenue growth but also steep losses.
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