Luckin said in the filing that beginning in the second quarter of 2019, chief operating officer Jian Liu and several of his direct reports “had engaged in certain misconduct, including fabricating certain transactions.” Luckin said Liu has since been suspended.
The company added that the fabricated transactions amounted to about 2.2 billion yuan (approximately $310 milion US) from the second quarter to the fourth quarter of last year.
“Certain costs and expenses were also substantially inflated by fabricated transactions during this period,” Luckin added in the SEC filing.
Luckin went public on the Nasdaq last May, which is why the company needs to file regular updates with the SEC.
Shares of Luckin were down sharply this year — even before Thursday’s accounting bombshell — due to concerns that Covid-19 were affecting its sales.