Xiaohongshu hit with real-name whistleblower complaint on the eve of its $70B Hong Kong IPO filing
TL;DR
On the eve of Xiaohongshu's $70B Hong Kong IPO filing, a former South-China commercial chief filed a real-name complaint to HKEX and the SFC on June 28, citing labor and option-vesting issues echoed by some 50 ex-employees.
Xiaohongshu plans to confidentially file for a Hong Kong IPO by the end of June at a $70 billion valuation, with Goldman Sachs and CICC as lead underwriters and a forecast $3 billion in 2026 net profit. On June 28 — right inside the filing window — a self-identified former commercial chief for Xiaohongshu's South China region, Chen Hao, filed a real-name Xiaohongshu Entity IPO Compliance Complaint to the HKEX Listing Department and the Hong Kong SFC, attaching court judgments, arbitration rulings, and termination certificates.
The complaint lists three specific audit asks: reconcile the contradiction between the domestic operating entity and the offshore equity platform, requesting underwriters and offshore counsel to provide a special clarification; fully disclose every labor arbitration, lawsuit, mass layoff, and re-issued termination certificate in the reporting period; audit ESG labor-compliance gaps end-to-end and write the remediation plan into the prospectus.
Chen is patient zero. He joined in June 2022 with the labor contract signed to the Guangzhou operating entity, while the employee stock-option agreement went to an offshore shell — Xingin International Holding Limited. Same employer relationship, two paper trails: domestic for wages, offshore for equity. In December 2023, the company unilaterally terminated him for "unfitness for the role," and his unvested options were voided. After arbitration and three rounds of litigation, by early 2026 he secured roughly RMB 850,000 in compensation and a re-issued termination certificate. Sharper still, his complaint claims around 50 former employees have reached out describing the same pattern: terminated without cause before their option vesting date, with all equity zeroed out.
The structural bet sits here: a termination right before vesting equals the company reclaiming unvested options and erasing those employees from the cap table. If that operates systematically, the prospectus has to redo its labor-disputes, equity-structure, and fully-diluted-share counts. As of this writing, Xiaohongshu has not publicly responded.
If it works for the company, the complaint stays one ex-employee's isolated case, HKEX shelves it as routine intake, and the IPO clears at $70B with one more risk paragraph in the prospectus. If it doesn't, HKEX orders a special review, the 50 parallel cases get dragged into the reporting period one by one, and both the timeline and the valuation get cut.
via NetEase Finance / Bloomberg / The Bamboo Works
The complaint lists three specific audit asks: reconcile the contradiction between the domestic operating entity and the offshore equity platform, requesting underwriters and offshore counsel to provide a special clarification; fully disclose every labor arbitration, lawsuit, mass layoff, and re-issued termination certificate in the reporting period; audit ESG labor-compliance gaps end-to-end and write the remediation plan into the prospectus.
Chen is patient zero. He joined in June 2022 with the labor contract signed to the Guangzhou operating entity, while the employee stock-option agreement went to an offshore shell — Xingin International Holding Limited. Same employer relationship, two paper trails: domestic for wages, offshore for equity. In December 2023, the company unilaterally terminated him for "unfitness for the role," and his unvested options were voided. After arbitration and three rounds of litigation, by early 2026 he secured roughly RMB 850,000 in compensation and a re-issued termination certificate. Sharper still, his complaint claims around 50 former employees have reached out describing the same pattern: terminated without cause before their option vesting date, with all equity zeroed out.
The structural bet sits here: a termination right before vesting equals the company reclaiming unvested options and erasing those employees from the cap table. If that operates systematically, the prospectus has to redo its labor-disputes, equity-structure, and fully-diluted-share counts. As of this writing, Xiaohongshu has not publicly responded.
If it works for the company, the complaint stays one ex-employee's isolated case, HKEX shelves it as routine intake, and the IPO clears at $70B with one more risk paragraph in the prospectus. If it doesn't, HKEX orders a special review, the 50 parallel cases get dragged into the reporting period one by one, and both the timeline and the valuation get cut.
via NetEase Finance / Bloomberg / The Bamboo Works
