Chinese regulators disclosed that they would impose a penalty against Luckin Coffee following confirmation of an accounting anomaly that has already forced the company to be delisted from the NASDAQ exchange.

In a Friday statement on its website, China's Finance Ministry, which started a probe into Luckin Coffee (China) and Luckin (Beijing) early May, found that the coffee chain engaged in unfair competition by registering 2.25 billion yuan ($322.60 million) in revenue through bogus coupons from April 2019 to the end of that year.

The results were mostly in connection with what Luckin divulged after a special body conducted an independent internal investigation. The committee found that the coffee group jacked up its sales last year by 2.12 billion yuan and expenses by 1.34 billion yuan.

China's State Administration for Market Regulation is also looking to take action against the two local firms of Luckin and associated third-party entities that helped Luckin to commit violations, the regulator, which did not specify the number of penalties, disclosed in a separate statement.

The Xiamen-based company has proved itself to be very problematic for Chinese regulators, partly because the coffee chain has sparked calls among U.S. investors to gain more access to the audits of Chinese groups listed in the U.S. stock markets.

According to a Journal report, Luckin has admitted that staff fabricated transactions valuing around $300 million. The disclosures came moments following the delisting of Luckin from the NASDAQ. Luckin has since been removed and has terminated Chief Executive Officer Jenny Zhiya Qian and Chief Operating Officer Jian Liu in May.

Lu may also likely face criminal charges in China after authorities uncovered emails in which he directed colleagues to commit fraud, Caixin previously learned from people with connections with local regulators.

The findings are another major pain for the beleaguered coffee chain, once touted as a big challenger to Starbucks Inc. and viewed as one of China's promising growth stories.

Though Luckin is not directly subject to the Securities Regulatory Commission's oversight, China's new Securities Law empowered the securities monitoring body to regulate such a firm as its operating assets are all in China, the source close to regulators disclosed.

The delisting of Luckin's U.S. shares added to worries about Chinese company governance after the U.S. Securities and Exchange Commission warned in April of the perils of investing in emerging market stocks, pointing out China in particular. The China Securities Regulatory Commission stated in April that it had conducted talks to work with SEC on a possible probe into Luckin.