BIT Mining has agreed to pay a $10 million fine to settle charges from the U.S. Department of Justice for bribing Japanese officials.

Former CEO Indicted for Role in Bribing Japanese Officials and BIT Mining Ltd. Resolves Foreign Bribery Investigation

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— Criminal Division (@DOJCrimDiv) November 18, 2024

In 2021, the Chinese company 500.com Limited, listed on the New York Stock Exchange, changed its name to BIT Mining. The rebranding was related to the shift in the company’s activities from providing online lottery services to cryptocurrency mining.

According to court documents, between 2017 and 2019, the company implemented a corruption scheme in Japan, attempting to secure a contract for opening a resort. In total, the company’s then-CEO Zhengmin Pan, along with employees and agents, paid $1.9 million in bribes, commissions, and other incentives to officials and intermediaries.

The company falsely classified these payments as legitimate expenses by entering into sham contracts for consulting and management services. Accounting violations were another point of accusation.

At the same time, 500.com lost the tender for the construction of a potentially profitable project that included hotels, a casino, retail, restaurants, conference rooms, and entertainment facilities, as noted by law enforcement.

Under the U.S. sentencing guidelines, the company faced a fine of up to $54 million. The Department of Justice took into account BIT Mining’s financial condition, which would not allow such sanctions to be paid.

In total, the company will pay $10 million. This includes a $4 million civil fine as part of the settlement of a parallel investigation by the U.S. Securities and Exchange Commission.

The Department of Justice also considered BIT Mining’s cooperation during the investigation. This included providing financial and other confidential information, which is largely restricted by Chinese law.

Law enforcement estimates that the company took a number of corrective measures, such as strengthening risk controls and audits by the board of directors. Furthermore, over time, BIT Mining shifted its business model to “an industry with lower corruption risk” and reduced its presence in problematic regions.

All these factors allowed the Department of Justice to apply the lower end of the penalty range under the guidelines.

For reference, in February 2021, BIT Mining (then 500.com) acquired the BTC.com mining pool. The company purchased the structure from Bitmain co-founder Jihan Wu, who received it as part of a settlement after resolving a conflict with his partner Micree Zhang.

In December 2023, the company sold the unprofitable pool at that time to Hong Kong-based Esport – Win Limited.