Luckin Coffee, associated firms fined nearly US$9 million over accounting fraud
The chain was also found to have engaged in anti-competitive practices.
Luckin Coffee was included in a list of 45 firms hit with a combined fine of nearly $9 million for acts linked to the Chinese chain’s falsification of financial records, China's market regulator said.
The State Administration for Market Regulation (SAMR) said investigations found that Luckin, with the help of other companies, had falsely increased its 2019 sales revenue, costs and profit margins.
The coffee chain, once touted as Starbucks' main rival in China, had boosted transactions last year through fake coupons by 2.25 billion yuan (US$330 million) and inflated its revenue by some 2.12 billion yuan, according to an earlier probe by the country’s finance ministry.
The accounting scandal led to the company being delisted from New York's Nasdaq and the removal of top executives.
“The Company is fully committed to cooperating with the SAMR, and will dedicate all necessary resources to ensure full compliance by the Implicated Companies with the Penalty Decisions,” the chain said in a statement in response to the penalties.