BIT Mining settles with DOJ, SEC for $10 million over Japanese bribery charges

BIT Mining has agreed to pay a $10 million total penalty to resolve investigations by the U.S. Department of Justice and U.S. Securities and Exchange Commission relating to the company’s role in an alleged scheme to bribe Japanese government officials.

According to court documents, between 2017 and 2019, BIT Mining (formerly 500.com) admitted to paying $1.9 million in bribes to Japanese government officials, via consultants, to secure a casino resort bid, which it ultimately did not win, the DOJ said Monday. BIT Mining entered into a three-year deferred prosecution agreement over one count of conspiracy to violate the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act and one count of violating the books and records provisions of the FCPA. The DOJ also charged the company’s former CEO, Chinese national Zhengming Pan, with violations of the FCPA.

500.com was an online sports lottery service provider based in Shenzhen, China, and its shares traded on the New York Stock Exchange under the symbol "WBAI." In April 2021, the company transitioned to focus on cryptocurrency mining and rebranded as BIT Mining, changing its ticker symbol to "BTCM."

Settlement falls short of $54 million guideline

BIT Mining agreed that the appropriate criminal penalty under U.S. sentencing guidelines was $54 million. However, due to the firm’s financial condition and inability to pay that amount, the DOJ agreed to the $10 total criminal penalty. In a parallel action, the firm also agreed to pay a $4 million civil penalty to settle similar SEC charges, which the DOJ will credit against the total figure. The SEC estimated the bribery scheme involved illicit payments of approximately $2.5 million in cash bribes, entertainment and extravagant trips.

“BIT Mining, under the alleged direction of then-CEO Zhengming Pan, agreed to pay nearly $2 million in bribes to Japanese government officials to win a contract to open a lucrative resort and casino in Japan,” DOJ Criminal Division head Nicole M. Argentieri said. “Today’s resolution and the charges against Pan demonstrate the department’s continued commitment to holding both corporate and individual wrongdoers accountable for their crimes.”

“Investors must have confidence that the operations and performance of public companies reflect merit and legitimate considerations. Bribery and corruption turn that dynamic on its head, distorting the orderly operation of the markets and undermining investor confidence,” Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said. “Here, 500.com’s deficient controls fostered an environment that enabled a bribery scheme involving the highest level of the company and influential Japanese officials.”

BIT Mining received credit for cooperating with the DOJ and FBI International Corruption Unit investigation, which was assisted by Japanese authorities. BIT Mining also agreed to cooperate in any ongoing or future criminal investigations, to improve its compliance programs, and report remediation efforts to the DOJ during the DPA's three-year term.