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Illustration: Sarah Grillo/Axios

Luckin Coffee, a Chinese rival to Starbucks that went public in the U.S. last year at a $4.3 billion valuation, fired both CEO Jenny Zhiya Qian and COO Jian Liu on Tuesday after an investigation into accounting fraud.

The backstory: Luckin disclosed in early April that its COO had fabricated around $310 million in 2019 sales — numbers the company had relied on while selling investors on both a secondary share sale and convertible bond offering.

  • That reveal caused Luckin's stock price to fall by around 80%. Today, the company's market cap is just north of $1 billion.
  • It also has sparked major due diligence questions for the Wall Street banks that led both Luckin's IPO and its subsequent offerings.
  • The company also placed six other employees on leave as a result of the investigation.

What they're saying ... Luckin today issued the following statement:

"During its ongoing internal investigation, the Special Committee of the Board has brought to the attention of the Board evidence that sheds more light on the fabricated transactions described in the press release issued by the Company on April 2, 2020. After considering such information, the Board has terminated Ms. Jenny Zhiya Qian and Mr. Jian Liu from the positions of the Chief Executive Officer and the Chief Operating Officer, respectively. The Board also demanded and received from Ms. Qian and Mr. Liu their resignations from the Board. In addition to Ms. Qian and Mr. Liu, since the beginning of the Internal Investigation, the Company has placed six other employees, who were involved in or had the knowledge of the fabricated transactions, on suspension or leave."

Go deeper

Texas AG sues Biden administration over deportation freeze

Texas Attorney General Ken Paxton speaks to members of the media in 2016. Photo: Alex Wong/Getty Images

Texas Attorney General Ken Paxton is suing the Biden administration in federal district court over its 100-day freeze on deporting unauthorized immigrants, and he's asking for a temporary restraining order.

Between the lines: The freeze went into effect Friday, temporarily halting most immigration enforcement in the U.S. In the lawsuit, Paxton claims the move "violates the U.S. Constitution, federal immigration and administrative law, and a contractual agreement between Texas" and the Department of Homeland Security.

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Axios Re:Cap digs into the bottlenecks and how to unclog them with Carbon Health chief executive Eren Bali, whose company recently began helping to manage vaccinations in Los Angeles.