(Reuters) - Luckin Coffee Inc has agreed to pay a $180 million penalty to settle accounting fraud charges for “intentionally and materially” overstating its 2019 revenue and understating a net loss, U.S. regulators said on Wednesday. The U.S. Securities and Commission (SEC) fine on the China-based rival to Starbucks comes after it said earlier this year that much of its 2019 sales were fabricated, sending its shares plunging and sparking an investigation by China’s securities regulator and the SEC. The SEC said it found that Luckin “intentionally and materially overstated its reported revenue and expenses and materially understated its net loss in its publicly disclosed financial statements in 2019.” Luckin has not admitted or denied the charges, the SEC said. The company has agreed to pay the penalty, which may be offset by certain payments it makes to its security holders in connection with its provisional liquidation proceeding in the Cayman Islands. “This settlement with the SEC reflects our cooperation and remediation efforts, and enables the company to continue with the execution of its business strategy,” Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee said in a statement. “The Company’s Board of Directors and management are committed to a system of strong internal financial controls, and adhering to best practices for compliance and corporate governance,” Guo added. The transfer of funds to the security holders will be subject to approval by Chinese authorities. “Public issuers who access our markets, regardless of where they are located, must not provide false or misleading information to investors,” SEC Director of Enforcement Stephanie Avakian said in a statement. “While there are challenges in our ability to effectively hold foreign issuers and their officers and directors accountable to the same extent as U.S. issuers and persons, we will continue to use all our available resources to protect investors when foreign issuers violate the federal securities laws,” she said. Founded in June 2017, Luckin had one of the most successful U.S. IPOs by a Chinese company last year, attracting interest from prominent U.S. investors, including long-only funds and hedge funds. But Luckin said in early April that as much as 2.2 billion yuan ($310 million) in sales last year were fabricated by its Chief Operating Officer Jian Liu and other staff, who had been suspended while the company carried out its investigation. The falsified numbers equate to about 40% of Luckin’s annual sales projected by analysts, according to Refinitiv IBES data. The Xiamen-headquartered company, which delisted from Nasdaq at the end of June due to the accounting scandal, used related parties to create false sales transactions through three separate purchasing schemes, the SEC alleged. “Luckin employees attempted to conceal the fraud by inflating the company’s expenses by more than $190 million, creating a fake operations database, and altering accounting and bank records to reflect the false sales,” the agency found. Further, the SEC alleges that during the period of the fraud, Luckin raised more than $864 million from debt and equity investors.