Bitcoin mining firm BIT Mining has admitted it authorized paying bribes to Japanese politicians in an attempt to win a bid for a resort and casino license in Japan and has agreed to pay $10 million worth of fines to the United States government to resolve the charges.
BIT Mining’s bribery scheme occurred between 2017 and 2019 when the firm was known as 500.com — a Chinese online sports lottery company.
The bribes consisted of roughly $2.5 million worth of illicit cash bribes, entertainment and extravagant trips for Japanese politicians, according to the US Securities and Exchange Commission’s Nov. 18 statement.
BIT Mining agreed to pay a $4 million civil penalty to the SEC and a $10 million criminal fine to the US Department of Justice (DOJ). However, $4 million of that will be satisfied by the civil penalty paid to the SEC.
Meanwhile, the DOJ has also charged 500.com’s then-CEO Zhengming Pan for orchestrating the bribes.
The DOJ said he entered into “sham contracts” with third-party consultants to make the illicit payments and falsely recorded those payments as legitimate business expenses to conceal the bribes.
Source: Department of Justice
The contract would have allowed the company to open a resort, including hotels, casinos, retail, dining, convention facilities and entertainment venues in Japan. However, the company ultimately failed to win the contract to open the resort.
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“Paying bribes to foreign government officials is a serious crime,” US Attorney Philip Sellinger for the District of New Jersey said.
One of the SEC’s Enforcement Division chiefs, Charles E. Cain, added that such bribes impact investor confidence in public companies that are supposed to operate with merit and integrity:
“Bribery and corruption turn that dynamic on its head, distorting the orderly operation of the markets and undermining investor confidence.”
According to US Sentencing Guidelines, BIT Mining should have faced a $54 million criminal fine, but this was reduced due to BIT Mining’s financial condition and inability to pay the penalty.
The company moved into Bitcoin mining in December 2020 and announced its name change three months later in March.
BIT Mining shares tanked 6.3% in after-hours when the SEC and DOJ issued their statements, Google Finance data shows.
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