A former online sportsbook turned cryptocurrency mining operation has been charged a $10m criminal penalty by the US Department of Justice (DoJ) for bribery.
BIT Mining, formerly known as 500.com, signed a three-year deferred prosecution agreement (DPA) with the Justice Department and the US Securities and Exchange Commission (SEC), one of the US’ financial regulators, over the allegations.
The company was charged with bribing Japanese government officials to the tune of $1.9m between 2017 and 2018, during which time it was known as and traded as 500.com.
The firm’s CEO, Zhengming Pan, a Chinese national, and other senior figures at the firm are alleged to have paid $1.9m to intermediaries knowing that these funds would be used to bribe Japanese officials.
US officials allege that these bribes were paid to try and help 500.com win a bid to open a large resort in Japan which would include casino, hotel, retail, dining, convention and entertainment facilities. The company’s bid was ultimately unsuccessful.
U.S. Attorney Philip R. Sellinger remarked: “Paying bribes to foreign government officials is a serious crime. The top leadership of BIT Mining, then known as 500.com, directed consultants to pay bribes to Japanese government officials to win a bid to open a large resort in Japan.
“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. The company has admitted its crimes and agreed to pay a $10 million penalty, and its then-CEO has been charged for his role in the scheme. This agreement and indictment hold both the corporation as an entity and its top leadership accountable.”
BIT Mining CEO Pan also faces an indictment from 18 June issued by the District of New Jersey, accusing it of violating the Foreign Corrupt Practices Act.
He has been charged with one count of conspiring to violate the FCPA’s anti-bribery, books and records provisions, one count of violating anti-bribery provisions, and a further two counts of violating books and records provisions.
The District Court added that the ‘appropriate criminal penalty’ for the charges levied against BIT Mining would be a penalty of $54m. However, the DPA between the Justice Department and BIT Mining determined that the firm would have a ‘demonstrated ability to pay’ this fee, and so the penalty has been set at $10m to the justice department and £4m to the SEC.
Principal Deputy Assistant Attorney General, Nicole M. Argentieri, Head of the Justice Department’s Criminal Division, said: “BIT Mining, under the alleged direction of then-CEO Zhengming Pan, agreed to pay nearly $2m in bribes to Japanese government officials to win a contract to open a lucrative resort and casino in Japan.
“Pan has been indicted for his alleged role in directing company consultants to pay the bribes and to conceal the illicit payments through sham consulting contracts. Today’s resolution and the charges against Pan demonstrate the department’s continued commitment to holding both corporate and individual wrongdoers accountable for their crimes.”
The case demonstrates that although cryptocurrency has been enjoying a significant resurgence in market value over the past year, the sector continues to be dogged by legal issues.
The approval of Bitcoin ETFs by the SEC, the Bitcoin halving event, and the recent election of vocally pro-crypto Donald Trump as US President have contributed to Bitcoin’s value rising to over $97,000 as of today (21 November 2024).
Regardless, various authorities remain concerned about criminal activity within the cryptocurrency space including cases of fraud, money laundering and other forms of criminal financing.
Whether or not Trump’s reassessment to the presidency early next year has any bearing on how authorities and law enforcement approach this will be an important development for the sector to monitor.
