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Luckin Coffee Inc has agreed to pay a fine of $ 180 million to settle charges for accounting fraud for “intentionally and materially” overestimating its 2019 earnings and underestimating a net loss, U.S. regulators said on Wednesday.

The U.S. Securities and Commission fine against Chinese rival Starbucks comes after it said earlier this year that much of its 2019 sales were fabricated, sending its shares plunging and triggering a investigation by the Chinese securities regulator and the SEC.

The SEC found that Luckin “intentionally and materially overestimated his reported income and expenses and significantly underestimated his net loss in his publicly released financial statements in 2019.”

Luckin neither admitted nor denied the charges, the SEC said. The company has agreed to pay the penalty, which may be offset by certain payments it makes to its security holders as part of its interim liquidation proceedings in the Cayman Islands.

Founded in June 2017, Luckin had one of the most successful U.S. IPOs of a Chinese company last year, attracting the interest of large U.S. investors.

But Luckin said in early April that up to 2.2 billion yuan ($ 310 million) in sales last year was made by its COO Liu Jian and other staff, who have been suspended. The Xiamen-based company, which was delisted from the Nasdaq in late June, used related parties to create bogus sell deals through three separate buy programs, the SEC said.

“Luckin employees attempted to cover up the fraud by inflating company expenses by over $ 190 million, creating a fake transaction database, and modifying accounting and banking records to reflect fake sales. “, did he declare.

Additionally, the SEC alleged that during the fraud period, Luckin raised more than US $ 864 million from debt and equity investors.

“This settlement with the SEC reflects our cooperative and remedial efforts, and allows the company to continue executing its business strategy,” Guo Jinyi, president and CEO of Luckin Coffee, said in a statement.

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