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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

1 hour ago - Health

Pfizer-BioNTech: Booster doses more effective at blocking Omicron

Prepared doses of the BioNtech-Pfizer Covid-19 coronavirus vaccine in Germany on Dec. 7. Photo: Thomas Kienzle/AFP via Getty Images

Pfizer and BioNTech said Wednesday that two doses of their COVID-19 vaccine were significantly less effective at neutralizing the Omicron variant in early lab tests, but a three-dose regimen was more effective.

Why it matters: Omicron, which has been labeled a variant of concern by the World Health Organization after being identified by scientists in South Africa last month, has forced vaccine makers to reassess the effectiveness of their vaccines against this specific new form of coronavirus.

Mike Allen, author of AM
1 hour ago - Politics & Policy

Biden unveils "Building a Better America" branding

President Biden speaks on infrastructure while visiting a bridge in Woodstock, N.H., last month. Photo: John Tully/Getty Images

President Biden today launched a new website and unveiled bold new branding as part of a nationwide tour to sell the benefits of his infrastructure package.

Why it matters: The White House says passage of the new law shows the ability to "forge bipartisan consensus and prove our democracy can deliver big wins" even in these toxic times.

3 hours ago - World

Olaf Scholz sworn in as German chancellor, succeeding Merkel

Incoming German Chancellor Olaf Scholz is sworn in by Bundestag President Bärbel Bas in Berlin today. Photo: Sean Gallup/Getty Images

Social Democrat Olaf Scholz was sworn in as chancellor of Germany on Wednesday, succeeding Angela Merkel after 16 years and launching a new era of German and European politics.

Why it matters: Scholz, a center-left pragmatist who served as finance minister and vice chancellor in Merkel's last government, will lead Europe's largest economy in a coalition with the environmentalist Greens and pro-business Free Democrats.