BIT Mining was fined $10 million following allegations of bribing Japanese government officials to win a contract to build a casino resort.

BIT Mining Admits Bribing Japanese Officials

China-based cryptocurrency mining company BIT Mining has agreed to pay a total fine of $10 million to resolve investigations by the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) related to an alleged scheme to bribe Japanese government officials, the U.S. Attorney's Office for the District of New Jersey said.

Former CEO of https://t.co/UtnFWrVUXF (now Bit Mining Ltd.) Indicted for Role in Bribing Japanese Officials and Bit Mining Ltd. Resolves Foreign Bribery Investigation https://t.co/EQxcHVXuFD

— NJ US Attorney (@USAO_NJ) November 18, 2024

According to court records, from 2017 to 2019, BIT Mining (formerly 500.com) admitted to paying $1.9 million in bribes to Japanese government officials through consultants to secure the right to build a casino resort, but it failed to win the bid.

The DOJ said BIT Mining entered into a three-year deferred prosecution agreement (DPA) related to one count of conspiracy to violate the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act (FCPA), as well as one count of violating the accounting provisions of the FCPA.

The DOJ also charged former BIT Mining CEO Pan Zhengming, a Chinese national, with violating the FCPA.

Previously, 500.com was an online sports lottery provider based in Shenzhen, China, and its shares were listed on the New York Stock Exchange (NYSE) under the ticker "WBAI." In April 2021, the company pivoted to cryptocurrency mining and changed its name to BIT Mining with the new ticker "BTCM."

Lower Penalty Than Originally Provided

Under U.S. law, the appropriate criminal penalty for BIT Mining is $54 million. However, given the company's current financial situation, which makes it unable to pay this amount, the DOJ has agreed to reduce the penalty to $10 million.

In a parallel move, the company also agreed to pay a civil penalty of $4 million to resolve similar charges from the SEC. The DOJ will credit this amount to the total penalty.

The SEC estimates that the bribery scheme included $2.5 million in cash, entertainment, and lavish trips.

“BIT Mining, under the direction of former CEO Pan Zhengming, agreed to pay nearly $2 million in bribes to Japanese government officials to win contracts to build a lucrative casino resort in Japan.

Today’s resolution and the charges against Mr. Pan are a testament to the Department’s continued commitment to holding individuals and businesses collectively accountable for their illegal conduct,” said Nicole M. Argentieri, head of the DOJ’s Criminal Division.

Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said:

“Investors need to have confidence that the operations and performance of public companies reflect their competence and legitimacy. Bribery and corruption disrupt that balance, distort the orderly functioning of markets, and undermine investor confidence.

In this case, 500.com’s weak controls facilitated a scheme to bribe senior levels of the company and influential officials in Japan.”

BIT Mining is noted to have cooperated with the DOJ and FBI’s International Corrupt Practices Unit investigation, with assistance from Japanese authorities. The company also pledged to cooperate with ongoing or future criminal investigations, improve its compliance programs, and report remediation efforts to the DOJ within the three-year term of the DPA.

This news provided some positive sentiment for BIT Mining’s BTCM stock, which jumped nearly 15% to $3.30 today from the $2.75 area.

However, looking at a broader time frame since 2021, after raising $50 million to "exit" the Chinese market due to the crackdown on cryptocurrency mining companies, BIT Mining's stock has continuously "tested the bottom" with a decrease of 99%.