Bit Mining Accused of Bribery in Japan: Settles with SEC for $4M

BIT Mining, formerly known as Chinese online sports lottery service provider 500.com, has reached a settlement in a bribery case with the U.S. Securities and Exchange Commission (SEC) to pay a $4 million civil penalty for violations of the Foreign Corrupt Practices Act (FCPA).

This follows revelations of a comprehensive bribery scheme carried out between 2017 and 2019.

The scheme aimed to influence Japanese government officials to secure a license for building an Integrated Resort (IR), including a casino.

The case also involved a deferred prosecution agreement (DPA) with the U.S. Department of Justice (DoJ).

Due to the company’s financial constraints, BIT Mining agreed to pay a $10 million criminal penalty, which was reduced from the initially assessed $54 million.

Bit Mining Bribery in Japan: Will $4M SEC Settlement End it All?

Between 2017 and 2019, BIT Mining, operating as 500.com at the time, sought to secure a license to develop an IR in Japan following the legalization of gambling in the country.

The company allegedly paid $2.5 million in bribes to Japanese officials, including members of parliament, to influence licensing decisions.

The bribes were reportedly funneled through sham consulting contracts and management advisory fees.

Payments included cash, entertainment, extravagant trips, and gifts, demonstrating a calculated strategy to sway key decision-makers.

The establishment of a Japanese subsidiary, 500.com Nihon, further facilitated the scheme, making it easier to channel funds and orchestrate illicit activities.

According to court filings, the efforts were directed by then-CEO Zhengming Pan, who faces multiple charges, including conspiracy to violate FCPA anti-bribery and books-and-records provisions.

Pan allegedly instructed consultants to carry out the bribery payments while ensuring the illicit transactions were concealed through false financial records.

The fallout from the scheme included a raid on 500.com’s offices in late 2019 by Tokyo prosecutors, leading to the prosecution of government officials who accepted bribes and the indictment of company consultants.

Despite these efforts, 500.com failed to secure the IR license, making the bribery attempt not only illegal but ultimately futile.

BIT Mining’s legal troubles culminated in a settlement with U.S. authorities. While the DoJ initially calculated a $54 million penalty under the U.S. Sentencing Guidelines, the amount was reduced to $10 million due to the company’s financial constraints.

As a result of coordination between the two agencies, the SEC’s $4 million civil penalty was credited toward this amount.

Repercussions and Industry Implications

U.S. Attorney Philip R. Sellinger emphasized that the corruption scheme was orchestrated at the highest levels of leadership, undermining the integrity of the company and the broader market.

“Paying bribes to foreign government officials is a serious crime. […] The illegal scheme started at the top, with the company’s CEO allegedly fully involved in directing the illicit payments and the subsequent efforts to conceal them.”

Authorities allege that Pan not only authorized but actively directed efforts to conceal the bribery through fabricated records and sham contracts.

As part of the DPA, BIT Mining has committed to enhancing its compliance measures, including implementing robust anti-corruption policies, conducting company-wide training programs, and increasing governance oversight by its board of directors.

The company also pledged to conduct annual risk assessments and integrate compliance criteria into senior management evaluations.

This case looks similar to the recent Colombian UNGRD scandal, which has taken a new turn as a former deputy director of the National Unit for Disaster Risk Management (UNGRD), Sneyder Pinilla, admitted to using cryptocurrency to deliver bribes worth around $1 million to two former assembly leaders, Iván Name and Andrés Calle.