Illustration by Nigel Buchanan

The secret operation got underway late last year. A small army of researchers were told to fan out across China, to cities big and small, to collect documents and videotape the activities of the prime target. The organizers had a hunch that Luckin Coffee, China’s fast-growing challenger to Starbucks and a company traded in the U.S. stock market, was falsifying financial statements to exaggerate its sales. The organizer set out to prove it, deploying 1,510 investigators to count sales and record traffic at more than 600 of the company’s retail stores, one mobile phone video at a time. A few months later, an anonymously written 89-page report landed on Wall Street and leveled one of China’s hottest startups. A pack of short-sellers — who backed the report’s harsh conclusions — pounced. They positioned themselves to profit from a collapse in Luckin’s stock price and began releasing more allegations of fraud, staggering the company just as the world was going into loc