Wall Street Bitcoin Miner CEO's $2M Casino Gamble Ends in Federal Indictment

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.