Ride-hailing and food delivery platform Didi could be hit with fines exceeding $1 billion following a probe by Chinese regulators that lasted over a year and forced the company to stop adding new users.
Once the penalty is officially announced, Didi will be able to offer its mobile app in domestic app stores again and reopen its platform to new users, The Wall Street Journal (WSJ) reported Tuesday (July 19), citing unnamed sources. Didi’s cybersecurity practices were under investigation due to data security breaches.
The fine, which would account for about 4% of Didi’s $27.3 billion total sales last year, could initiate a new public listing in Hong Kong, according to the report.
The Cyberspace Administration of China and Didi didn’t immediately reply to WSJ’s requests for comment.
Last week, the payments division of Didi was hit with 4.27 million yuan (about $633,000) in fines by the People’s Bank of China. Penalties were levied for 12 violations concerning requirements for transactions regarding traceability and authenticity, opening accounts for financial firms and neglecting to promptly communicate important risk events.
Regulators in China launched an investigation into Didi following its listing on the New York Stock Exchange (NYSE) in June 2021. The probe ordered app stores in China to delete Didi’s app. Didi delisted from the NYSE in June and relayed to shareholders that the move was necessary to due to a cybersecurity investigation by regulators in China.
See more: SEC Probes Didi’s US IPO
Before Didi delisted, the U.S. Securities and Exchange Commission (SEC) ordered a probe in May into the initial public offering (IPO). Didi said it would cooperate with authorities.