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US
authorities have charged the former CEO of Bitcoin (BTC) mining company from
Wall Street, BIT Mining Ltd. (NYSE: BTCM), with orchestrating a
multimillion-dollar bribery scheme targeting Japanese officials. The company
agreed to pay $14 million in combined penalties to resolve related
investigations.
Former CEO of Wall Street
Bitcoin Miner Indicted
Zhengming
Pan, a Chinese national who led the company when it was known as 500.com, faces
multiple counts of violating the Foreign Corrupt Practices Act (FCPA). A
federal grand jury in New Jersey returned an indictment charging Pan with
conspiracy to violate anti-bribery provisions and books and records violations,
stemming from his alleged direction of approximately $1.9 million in bribes to
Japanese government officials between 2017 and 2019.
The
elaborate scheme, which ultimately failed to secure the desired casino rights,
involved a complex web of third-party consultants who helped facilitate
payments in the form of cash, entertainment, and lavish trips. These
consultants were allegedly engaged by Pan to both execute and conceal the
bribes through fraudulent contracts and false expense recordings.
Principal
Deputy Assistant Attorney General Nicole M. Argentieri emphasized the
significance of the case, stating that the charges demonstrate the department’s
commitment to holding both corporate entities and individual wrongdoers
accountable for their actions. The investigation revealed that the corruption
extended to the highest levels of the company’s leadership.
“BIT
Mining, under the alleged direction of then-CEO Zhengming Pan, agreed to pay
nearly $2 million in bribes to Japanese government officials to win a contract
to open a lucrative resort and casino in Japan,” commented Argentieri.
The
settlement includes a three-year deferred prosecution agreement (DPA) with the Department
of Justice (DoJ), under which BIT Mining will pay a $10 million criminal
penalty. While the US Sentencing Guidelines initially calculated a penalty of
$54 million, authorities significantly reduced the amount after considering the
company’s financial condition and inability to pay the full amount.
“Paying
bribes to foreign government officials is a serious crime,” added US Attorney
Philip R. Sellinger for the District of New Jersey. “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.”
Last year,
the Department of Justice imprisoned another crypto kingpin who was sentenced
to 12 years behind bars for a $100 million Ponzi scheme.
Separate Fine from SEC
In a
parallel action, the Securities and Exchange Commission (SEC) imposed a $4
million civil penalty, which will be credited against the Justice
Department’s criminal fine. The SEC’s investigation
uncovered that the total value of illicit payments and benefits provided to
Japanese officials reached approximately $2.5 million.
The
company’s cooperation with investigators, though described as “reactive
and limited” by authorities, included the voluntary production of
documents from foreign countries and assistance with translations. The Wall Street Bitcoin
miner has since undertaken substantial remedial measures to prevent future
violations.
“Investors
must have confidence that the operations and performance of public companies
reflect merit and legitimate considerations,” Charles E. Cain, Chief of the SEC
Enforcement Division’s FCPA Unit, highlighted the broader implications of the
case. “Bribery and corruption turn that dynamic on its head, distorting the
orderly operation of the markets and undermining investor confidence.”
As part of
its corporate reformation, BIT Mining has implemented changes to its governance
structure. The company has strengthened its board oversight of compliance
risks, established new anti-corruption policies, and incorporated compliance
criteria into senior management performance evaluations. Perhaps most significantly,
the company has shifted its business model toward lower-risk industries and
reduced its presence in high-risk regions.
This article was written by Damian Chmiel at www.financemagnates.com.
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