Former Crypto Mining Firm CEO Indicted for Role in Japanese Bribery Scheme
On Monday, November 18, 2024, the U.S. Attorney’s Office for the District of New Jersey announced the indictment of Zhengming Pan, the former CEO of 500.com, now known as BIT Mining Ltd. Pan, a Chinese national, faces serious charges related to violations of the Foreign Corrupt Practices Act (FCPA) due to his alleged involvement in a bribery scheme aimed at Japanese government officials.
The announcement reveals that BIT Mining Ltd. has entered into a deferred prosecution agreement (DPA) with the Justice Department and the Securities and Exchange Commission (SEC) to resolve ongoing investigations regarding related FCPA violations. The company admitted to engaging in a corrupt scheme to pay bribes in order to secure a contract for opening a large resort and casino in Japan.
According to the indictment unsealed by a federal grand jury, Pan is charged with multiple counts, including conspiracy to violate anti-bribery provisions, along with specific violations of the FCPA’s books and records provisions. The investigation indicated that between 2017 and 2019, Pan and others at 500.com orchestrated payments totaling approximately $1.9 million to intermediaries, fully aware that these funds would be used as bribes for Japanese officials.
The U.S. Attorney for the District of New Jersey, Philip R. Sellinger, emphasized the gravity of the charges, noting that the leadership at BIT Mining directed consultants to engage in bribery to gain an unfair advantage in securing the resort project. The indictment claims that Pan was directly involved in both the direction of these payments and the efforts to conceal them.
Principal Deputy Assistant Attorney General Nicole M. Argentieri stated that Pan’s indictment underscores the Justice Department’s commitment to holding both corporations and individuals accountable for illegal actions. She described the bribes as part of a broader scheme, where Pan allegedly instructed consultants to pay these illicit amounts and to disguise them through sham contracts.
Despite executing this bribery scheme, 500.com did not ultimately win the bid for the integrated resort in Japan. The nature of the bribes included cash payments, travel expenses, entertainment, and gifts, which were falsely recorded as legitimate expenses within the company’s financial records.
In connection with the DPA, BIT Mining has agreed to pay a total criminal penalty of $10 million, significantly lower than the calculated penalty of $54 million based on U.S. Sentencing Guidelines. This reduction was made in consideration of BIT Mining’s financial condition and its inability to pay the higher amount. The Justice Department also indicated that up to $4 million of this penalty could be credited against a civil penalty that BIT Mining has agreed to pay to the SEC as part of a parallel investigation.
As part of the resolution, BIT Mining committed to ongoing cooperation with federal authorities in any future investigations and has pledged to enhance its compliance programs. The DPA mandates the company to provide periodic reports to the Justice Department regarding its compliance measures over the next three years.
The indictment and the DPA result from a comprehensive investigation led by the FBI’s International Corruption Unit. Assistant Director Chad Yarbrough highlighted the FBI’s dedication to pursuing individuals involved in such illegal activities, emphasizing that these actions undermine fair business practices.
