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BIT Mining Ltd., formerly known as 500.com, has reached a settlement with the U.S. Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) for violations of the Foreign Corrupt Practices Act (FCPA).
The Justice Department also unsealed an indictment against former CEO Zhengming Pan, accusing him of engaging in a bribery scheme to win casino business in Japan.
Fine reduced from $100,000 to $540,000 due to financial hardship
The DoJ alleges that between 2017 and 2019, at Pan’s direction, BIT Mining organized payments totaling nearly $20,000 to Japanese government officials. The funds were used to secure a bid for an integrated resort in Japan, a massive project that includes a hotel, casino, retail stores and other amenities.
According to court documents, Fan authorized third-party consultants to be hired to facilitate and conceal the bribes. Consultants disguised illegal payments through fake contracts, which were fraudulently recorded as legitimate expenses, such as management consulting fees. Despite extensive bribery efforts, BIT Mining did not win the resort bid.
On March 18, a federal grand jury in the District of New Jersey indicted Fan. The indictment includes charges of conspiracy to violate the anti-bribery and recordkeeping provisions of the FCPA and direct violations of that law.
BIT Mining entered into a 10-year Deferred Prosecution Agreement (DPA) with the DoJ, admitting its role in the bribery case. Under the agreement, the company will pay a reduced fine from $540,000 to $540,000 due to financial difficulties. The DoJ considered BIT Mining’s limited solvency and corrective actions, including overhauling its compliance program and governance practices. Companies must also continue to cooperate with future investigations and report regularly on improvements in compliance.
U.S. Attorney Philip R. Selinger said, “Bribing a foreign government official is a serious crime. Top executives of BIT Mining, then known as 500.com, had their consultants bribe Japanese government officials to win a bid to open a large resort in Japan. The illegal scheme began at the top, with the company’s CEO reportedly directing the illegal payments and being fully involved in subsequent efforts to conceal them. , the CEO at the time was “This settlement and indictment holds both the corporation and its top executives accountable for their role in the scheme.”
“BIT Mining, at the direction of then-CEO Zheng Ming Fan, bribed Japanese government officials with nearly $20,000 to win contracts to open lucrative resorts and casinos in Japan,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s criminal division. Today’s resolution and the indictment filed against Phan are accused of bribing the company’s consultants and directing them to conceal illegal payments through sham consulting contracts, which the Justice Department holds accountable for both corporate and personal wrongdoing. Continuously to ask “It shows you’re trying,” he said.
“Today’s indictment of the former CEO of BIT Mining on charges of bribing Japanese officials underscores the FBI’s commitment to holding individuals accountable for these types of criminal activities,” said Chad Yarbrough, Deputy Director of the FBI’s Criminal Investigation Division. undermines the integrity of business practices. “The FBI will relentlessly pursue those involved in illegal schemes that create unfair advantages and ensure they face the full consequences of the law,” he said.
SEC Findings and Settlement
In a parallel investigation, the SEC charged BIT Mining with FCPA violations related to inadequate internal accounting controls that allowed the bribery scheme to unfold. The SEC’s investigation found that BIT Mining, then 500.com, paid approximately $250,000 in bribes, including cash, entertainment and luxury travel for Japanese government officials. Charles E. Cain, head of the SEC’s FCPA Division, emphasized the importance of these controls. “Bribery and corruption distort market fairness,” he noted. “500.com’s poor oversight enabled a high-level bribery scheme that undermined investor confidence.”
BIT Mining agreed to a $40,000 civil penalty, which will be credited to the DoJ settlement. The SEC emphasized the importance of a robust and effective compliance program to prevent similar incidents. The company pledged to stop further FCPA violations and implement enhanced oversight and anti-corruption measures.
This case highlights the U.S. government’s ongoing efforts to combat foreign bribery and hold accountable the companies and individuals involved. Emphasizes the important role of strict internal controls and corporate transparency. The FBI’s International Corrupt Practices Unit and the SEC’s specialized FCPA team led the investigation, and BIT Mining’s cooperation was instrumental in solving the case.
“Investors must have confidence that the operations and performance of public companies reflect merit and due consideration,” said Charles E. Kane, head of the FCPA Division of the SEC’s Enforcement Division. “Bribery and corruption upset that dynamic and prevent the orderly operation of markets. distorting and undermining investor confidence. Here, 500.com’s poor controls created an environment that enabled a bribery scheme involving the company’s most senior and influential Japanese officials, which was properly implemented and effective throughout the organization. The need for internal accounting controls “I emphasize this,” he said.
How can the lessons learned from BIT Mining Limited’s case be applied to improve overall corporate governance practices in the tech industry?
Questions for the guests:
1. Can you please provide an overview of the FCPA violations committed by BIT Mining Limited, formerly known as 500.com, and the resulting settlement with the US Department of Justice (DoJ) and the Securities and Exchange Commission (SEC)?
2. How did the involvement of the company’s CEO, Zhengming Pan, contribute to the bribery scheme and concealment of the illegal payments?
3. What are your thoughts on the reduced fine imposed on BIT Mining Limited due to their financial difficulties? Does this send a clear message about corporate accountability for FCPA violations?
4. What are the implications of the DoJ’s 10-year Deferred Prosecution Agreement (DPA) for BIT Mining Limited, and how does it impact their ability to do business going forward?
5. The SEC also charged BIT Mining Limited with violating the FCPA due to inadequate internal accounting controls. How important are these controls in preventing such illegal activities from occurring in the future?
6. In your opinion, what role did BIT Mining Limited’s cooperation play in reaching a settlement with the US government? Do you see this as a positive step forward in combating foreign bribery and corruption?
7. The DoJ emphasized the need for corporate transparency and merit-based operations. What does this mean for public companies, particularly those operating in international markets where bribery and corruption are prevalent? How can they ensure compliance with the FCPA and maintain investor confidence?
8. what advice would you give to other companies operating in similar industries or geographies to avoid falling victim to FCPA violations and protect their reputation and bottom line?
