Alibaba shares intradaySource: FactSet
Chanos also pitched JD.com — China's second-largest e-commerce company — as a long in order to hedge the Alibaba short.
This led JD.com shares to session highs before trading over 2.5 percent higher.
JD.com shares intradaySource: FactSet
Chanos has been a longtime bear on China and warned in September that Beijing was running out of room to borrow, which would lead to a "credit event."
"The debt is still growing two to three 'X' the economy every year," he said.
Alibaba did not immediately respond to a CNBC request for comment.
— CNBC's Scott Wapner and Matthew Belvedere contributed to this report.
CORRECTION: This version corrected attribution of Chanos citing "accounting concerns" to the sources.