Shein Group, the fast-fashion retailer headquartered in Singapore and founded in China, is under investigation by the U.S. Federal Trade Commission (FTC), the company disclosed as it prepares for a planned initial public offering (IPO) in Hong Kong. The investigation pertains to Shein’s U.S. business operations, though neither Shein nor the FTC has provided details about the scope or origin of the probe.

In a regulatory filing submitted to the Hong Kong stock exchange, Shein acknowledged its cooperation with the FTC inquiry and indicated that the outcome could result in substantial financial penalties. The company stated that it might be required to make significant monetary payments, which could materially affect its financial position and operating results. However, Shein also noted that it cannot predict the timing or final outcome of the investigation and did not rule out the possibility of a near-term resolution.

The disclosure comes as Shein moves forward with its Hong Kong listing after previously obtaining approval from Chinese regulators earlier this year. The company had initially planned to launch its IPO in the United States, but those efforts were derailed amid increased U.S. scrutiny over Shein’s supply chain and labor practices in China. At one point, Shein reportedly also considered a listing in London.

In addition to the FTC investigation, Shein has faced regulatory attention from the European Union over allegations involving the sale of potentially illegal products and concerns about risks linked to the platform’s design. Despite these challenges, Shein has achieved significant growth, reaching a valuation nearing $100 billion during a 2022 fundraising round.

An FTC spokesperson confirmed the investigation but declined to provide further comments. Shein did not respond immediately to requests for additional information regarding the probe. The company’s disclosure highlights the heightened regulatory pressures facing global ecommerce platforms amid growing concerns about consumer protection, supply chain transparency, and product safety.