The potential legal claims concern possible violations of securities law committed by Luckin Coffee management that has led to significant losses to investors. Recent lawsuits filed against the company allege that the company significantly overstated its sales data, and allege wrongdoing committed by management.

The shareholder lawsuit stems from the disaster that LK investors have faced in recent months. Public knowledge of potential problems with the company began brewing when a scathing report was published about the company in early 2020.  According to the report, Luckin inflated per-store per-day sales, its net selling price per item, its advertising expenses, and its revenue contribution from "other" products. The same day, LK stock price fell with a big surprise to the shareholders. Then, on April 7th, 2020, trading in LK was halted.

Luckin Coffee Inc is a Chinese coffee company and coffeehouse chain. It was founded in Beijing in 2017. As of January 2020, it managed 4,507 stores and exceeded the number of Starbucks stores in China. Most of its stores are small "pick-up" locations in office buildings or college campuses that serve for online orders' pickup and delivery.

In April 2020, the company revealed that it had inflated its 2019 sales revenue by up to US$310 million. It resulted in the stock price crashing and several executives being fired. Trading was suspended and the company was delisted from NASDAQ on 29 June 2020. The company filed for Chapter 15 bankruptcy in the US in February 2021.