Luckin Fires CEO, COO After Probing Fabricated Transactions

Luckin Coffee Inc. fired its CEO and another top executive as a growing financial scandal upends the Chinese chain that had vowed to take on Starbucks Corp.

Chief Executive Officer Jenny Zhiya Qian and Chief Operating Officer Jian Liu were terminated and have also resigned their board positions, according to a filing Tuesday. Six others involved in the matter were either suspended or placed on leave.

Jinyi Guo, a board member and senior vice president has been named acting CEO, the company said. It also named new two new board members.

The company’s shares have been suspended for a more than a month after the company announced last month that it was investigating whether senior officials were involved in fabricated transactions. Prior to the suspension, the announcement sent the shares down more than 75% in a single trading session. The company has experienced accelerated growth, but is now facing scrutiny from regulators in both the U.S. and China.

The company suspended Liu last month and said investors shouldn’t rely on financial statements for the nine months ended Sept. 30. Luckin has alreadydelayed its annual results, saying it was unable to prepare the financial report due to the coronavirus pandemic.

The transactions under investigations, which occurred last year, totaled about 2.2 billion yuan ($310 million). Luckin’s offices in China wereraided by authorities last month as part of a multi-agency investigation into its finances, Bloomberg has reported.

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