Chinese coffeehouse chain Luckin Coffee fired its CEO and COO amid an investigation into the company’s accounting scandal, according to a filing to the US Securities and Exchange Commission.
CEO Jenny Zhiya Qian and COO Jian Liu have been terminated by Luckin’ board. After an internal investigation, six other employees who were involved or aware of the financial fraud were also suspended.
Luckin’s board of directors has appointed senior vice president and board director Jinyi Guo as acting CEO and added Wenbao Cao and Gang Wu to the board. Cao has served as the company’s senior vice president since 2018, in charge of store operations and customer services. Prior to joining the coffee chain, Cao had worked at McDonald’s China for over 23 years, where he served as vice president.
Luckin revealed on April 2 that its COO Liu Jian was involved in a financial fraud that included fabricating about 2.2 billion yuan worth of transactions. The company’s board of directors has set up a special committee to conduct an internal investigation. Meanwhile, several US law firms have filed a class action against the Chinese Starbucks rival on the grounds of US securities law violations.
Luckin’s shares plummeted after the scandal broke. The Nasdaq stock market has suspended trading in Luckin shares on April 7 while requesting more information from the company. The stock last traded at $4.39, leaving Luckin with a market capitalization of $1.1 billion, down from the roughly $4 billion IPO valuation.