BIT Mining, previously known as the online sports lottery company 500.com, has agreed to pay $10 million in fines to settle charges of bribing Japanese officials. The bribery, which occurred between 2017 and 2019, was part of an effort to secure a lucrative resort and casino license in Japan.
Details of the Bribery Scheme
During its operations as 500.com, BIT Mining authorized approximately $2.5 million in cash bribes, extravagant trips, and entertainment for Japanese politicians. The illicit payments were intended to win a contract for a resort project, which would have included hotels, casinos, retail outlets, dining options, convention centers, and entertainment facilities.
The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) outlined the fraudulent methods used, including:
- Sham Contracts: Then-CEO Zhengming Pan orchestrated the bribes through fake contracts with third-party consultants.
- Falsified Records: The payments were misreported as legitimate business expenses to conceal their true purpose.
Despite these efforts, BIT Mining failed to secure the resort license.
Financial Penalties and Legal Consequences
BIT Mining has agreed to pay:
- $10 Million Total Fine: $6 million to the DOJ and $4 million to the SEC. The $4 million civil penalty to the SEC will count toward the total fine.
- Reduced Penalty: While sentencing guidelines suggested a $54 million fine, BIT Mining’s financial condition and inability to pay led to a reduced penalty.
The DOJ has also charged former CEO Zhengming Pan for orchestrating the scheme.
Official Statements
U.S. Attorney Philip Sellinger emphasized the severity of bribery:
“Paying bribes to foreign government officials is a serious crime.”
Charles E. Cain, an SEC Enforcement Division Chief, highlighted the impact on investor trust:
“Bribery and corruption distort market operations and undermine investor confidence.”
BIT Mining’s Transition to Bitcoin Mining
In December 2020, BIT Mining shifted its focus to Bitcoin mining, officially changing its name in March 2021. However, its past continues to affect its operations and market performance. Following the announcements by the SEC and DOJ, BIT Mining’s stock (BTCM) fell 6.3% in after-hours trading, according to Google Finance.
