Luckin Coffee's stock has been halted for pending news since Tuesday morning.
The coffee chain said Thursday that an internal investigation had found that its chief operating officer had fabricated 2019 sales by about 2.2 billion yuan ($310 million). Its shares have plummeted 83% since disclosing the fraud.
The stock was up 0.9% in premarket trading Tuesday before it was halted at 9:15 a.m. Eastern time. There is no time limit for how long a stock can be halted for pending news.
Downloads of Luckin's app have skyrocketed in recent days as Chinese consumers rush to claim the free drink offered as an incentive to add the app, according to Reuters.
Luckin's co-founder and chairman, Lu Zhengyao, is trying to distance himself from his other companies to limit the fallout, the Financial Times reported Wednesday. His other businesses include China Auto Rental and Ucar. China Auto executives told the newspaper that Lu would consider stepping down as chairman of the car rental company as a way to convince investors of the business' independence from Luckin.
Goldman Sachs said Tuesday it would seize and sell Luckin Coffee shares from Lu after he defaulted on the terms of a $518 million margin loan.
Luckin and the Nasdaq Exchange declined to comment.