The Luckin Coffee incident is complicated and confusing. What is the inside story behind the incident?

Capital leeks, capital wool? Today, Luckin Coffee has launched a 12% discount coupon, a domestically produced light that gives away free coffee every month, and can compete with Starbucks as China’s No. 1 coffee. The brand has become an object of ridicule among netizens. From Ruixing's self-exposure of forging a transaction volume of 2.2 billion yuan, to the resignation of the independent director, to the news on April 27 that Ruixing Coffee was taken over by the public security and industrial and commercial departments. In just 25 days, the former No. 1 domestic coffee brand has lost its glory. ?

On April 2, Luckin Coffee suddenly announced that the company’s board of directors has now established a special committee to conduct an audit and investigation of the 2019 financial report. Ruixing said that starting from the second quarter of 2019, Ruixing Coffee’s chief operating officer and some subordinate employees were involved in improper conduct such as falsification of sales. Preliminary information from the internal investigation determined that from the second quarter to the fourth quarter of 2019, the total amount involved in false transactions was ***2.2 billion yuan. Due to the existence of false transactions of RMB 2.2 billion, certain costs and expenses during the operating period have also been significantly inflated. Luckin Coffee's stock price experienced six circuit breakers during the session on April 2, Eastern Time, and its stock price plummeted nearly 81%. The closing price the day before was $26.2. After the announcement of this investigation, Rising Coffee’s share price was only $7.09. After two consecutive declines on April 3 and 6, Rising Coffee’s share price was only $4.39 since the close of trading on April 6. In just three trading days, Luckin Coffee’s market value evaporated by US$5.216 billion and trading was suspended. ?

On the morning of April 5, in response to Luckin Coffee’s RMB 2.2 billion fraud, Luckin Coffee Chairman Lu Zhengyao expressed remorse on WeChat, saying that the company has run too fast in the past two years and caused too many problems. Now, I fell down, and as the chairman, I need to apologize. I will also accept all doubts and criticisms and do my best to recover losses. On April 21, Luckin Coffee said that Thomas Meyer, the company’s independent director, resigned from his position as independent director and the audit committee under the board of directors. After Thomas Meyer resigned, only three people remained on the audit committee of Luckin Coffee. On April 22, the China Banking and Insurance Regulatory Commission responded to the Luckin Coffee incident, stating that the incident was of a vile nature and profound lessons, and that the China Banking and Insurance Regulatory Commission would cooperate with the competent authorities to handle it in accordance with the law. On the morning of April 27, a screenshot of a chat circulated on the Internet. The screenshot stated that Luckin Coffee had been taken over by the public security department and the industrial and commercial department, and all data and all counterfeit database sources had been handed over. At around 1:30 p.m., two industrial and commercial personnel entered Luckin Coffee’s Beijing headquarters. At 3 p.m., Luckin Coffee posted on its blog that the company is actively cooperating with regulatory authorities and stores across the country are operating normally.

In fact, Luckin Coffee can be found everywhere, and the coffee tastes pretty good. If you like it, you can still try it.