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Crypto mining firm BIT Mining has agreed to pay a $10 million penalty to the U.S. Department of Justice (DOJ) over Securities and Exchange Commission (SEC’s) allegations of involvement in a widespread bribery scheme. The DOJ stated that $4 million of the penalty will be given as a civil fine to the SEC to settle a parallel investigation.
According to the SEC, BIT Mining, formerly known as 500.com, breached the Foreign Corrupt Practices Act (FCPA) between 2017 and 2019. The violations involved attempts to influence foreign officials, including members of Japan’s parliament, in an effort to build a resort casino in Japan.
In the official statement, the SEC’s findings revealed that the bribery scheme included illegal payments totaling approximately $2.5 million, delivered through cash bribes, entertainment, and luxurious trips. These payments were authorized by a senior executive at 500.com. After the bribery scheme came to light, the company failed to enter the Japanese market.
BIT Mining has agreed to the SEC’s order, admitting to violations of the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions. The company has also agreed to cease and desist from further violations and to pay the aforementioned civil penalty.
Zhengming Pan, a former senior executive of the company, has been indicted on multiple charges. According to the DOJ, Pan faces one count of conspiracy to violate the anti-bribery and books-and-records provisions of the FCPA. He has also been charged with one count of violating the anti-bribery provisions and two counts of violating the books-and-records provisions of the FCPA.
Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit, stated: “Investors must have confidence that the operations and performance of public companies reflect merit and legitimate considerations. Bribery and corruption turn that dynamic on its head, distorting the orderly operation of the markets and undermining investor confidence.”
Cain emphasized that this case highlights the importance of strong internal accounting controls that are effectively implemented and maintained throughout a firm.