On May 1, it was reported that He Gang, chief technology officer of Luckin Coffee (Nasdaq: LK), had resigned for personal reasons. Mr. Ho left the company on Thursday (April 30), citing people familiar with the matter. According to previous media reports, He gang joined Luckin Coffee in September last year, served as Vice President of Technology and President of JD.com, Chief Executive Officer of Shanda Cloud Computing and Vice President of Shanda Group, Head of Amazon Development, Chief Research Manager of Microsoft Advertising Center and Chief Software Development Engineer of the Database.
It is also the departure of another key person since Luckin Coffee’s financial fraud. On April 23rd, Thomas Meier, an independent director of Luckin Coffee, also serves on the audit committee of Luckin Coffee’s board of directors, who submitted his resignation to the company.
Luckin Coffee is headquartered in Xiamen, Fujian Province and opened in January 2018. In November 2017, Qian Zhiya stepped down as a director and COO of Shenzhou Auto, leaving the company to start a business and setting up Luckin Coffee. The two-year-old Luckin Coffee, which has been in existence through “crazy” store openings and user subsidies, not only quickly gained a foothold in The Chinese coffee market, but also launched its fastest IPO in China in May 2019 on NASDAQ.
On April 2 this year, Luckin Coffee filed a filing with the Securities and Exchange Commission alleging that the company’s chief operating officer, Liu Jian, had made financial fraud involving about $2.2 billion in transactions, and that the company’s board of directors had set up a special committee to conduct an internal investigation. In addition, several U.S. law firms have filed a class-action lawsuit against Luckin Coffee for making false and misleading statements that violate U.S. securities laws.
Luckin Coffee’s shares plunged after the news broke. The stock has been suspended since April 7, after Nasdaq asked for more information from Luckin Coffee, and its final sale was $4.39, leaving it with a market value of $1.1 billion.
According to a source familiar with the matter, the U.S. SEC is investigating financial fraud by Luckin coffee employees, according to a source familiar with the matter. The CSRC has also publicly stated that luckin coffee has for the first time made a solemn position to the outside world since it was exposed for financial fraud and has communicated with the US SFC on cross-border regulatory cooperation. The CSRC also said the U.S. Securities and Futures Commission had responded positively.