HKSAR v. TAM LAI YIN

HCCC 213/2024

[2025] HKCFI 2116

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 213 OF 2024

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REASONS FOR SENTENCE

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1.  The defendant pleaded guilty before Magistrate Ms. Vivian Ho to one count of theft[1] (count 1)  and 3 counts of dealing with property known or believed to represent proceeds of an indictable offence[2] (counts 2, 3 and 4)  and was committed, on 2^nd July 2024, to the Court of First Instance for sentence. He confirmed his pleas and admission to the Summary of Facts before me, and his convictions were duly recorded.

FACTS

2.  In gist, the defendant stole 3.2 million of the cryptocurrency USDT (approximately HK$25 million’s worth)  from the company that he was working for over a period of about 7 months.  The stolen USDT were transferred into cryptocurrency electronic wallets (“e-wallets”)  held by the defendant, his girlfriend and the girlfriend’s brother, and eventually dealt with by way of conversion to and trading in other cryptocurrencies, of trading in stocks, and of purchasing of properties.

3.  USDT is a “stablecoin”[3] pegged to the US Dollar founded on the blockchain technology, and can be traded on cryptocurrency exchanges.  It can be directly purchased or cashed out via Tether or other third-party cryptocurrency exchanges that support USDT services.  All transfers of USDT are recorded on a blockchain, which plays the role of a ledger.

4.  The defendant joined Zota Technologies Limited (“Zota”)  in March 2019 as a junior financial operator.  Zota is the back office of its headquarters located in Singapore, main business of which is the provision of technological support to global network payment solutions.

5.  The defendant’s job duties included the conducting of reconciliation, keeping of financial records, and the operating of two cryptocurrency accounts of Zota (“Account 1” and “Account 2”, collectively as “the two accounts”)  held with a cryptocurrency trading platform called “OTC 365”.

6.  The defendant was required to report discrepancies and irregularities in the two accounts to the operation manager of Zota, who would then investigate and report to the company’s headquarters his or her findings.

7.  The defendant was also required to, and was the only person responsible for, conducting reconciliation on the two accounts at least once every week.

8.  In mid-July 2022, Zota discovered that the quantity of USDT in the two accounts did not match their internal records.  The discrepancies had not been reported by the defendant to the operation manager as he was required to.

9.  Investigation revealed that 2,400,000 USDT and 800,000 USDT (equivalent to approximately HK$25 million together)  had been withdrawn from Accounts 1 and 2, respectively, via 64 unauthorized transactions between 11^th December 2021 and 16^th July 2022.  This 3.2 million USDT would become the subject matter of count 1 (“the stolen USDT”).

10.  Transaction records revealed that 2.25 million of the stolen USDT was withdrawn from an e-wallet (“wallet A”)  between 11^th December 2021 and 4^th June 2022 in 45 transactions.  The remaining 950,000 was withdrawn from a different e-wallet (“wallet B”)  between 11^th June 2022 and 16^th July 2022 in 19 transactions.  

11.  The stolen USDT were later transferred to another e-wallet (“wallet C”), and then into e-wallets controlled by the defendant and his girlfriend, Ms. Deng[4], as listed out below:

12.  Representatives of Zota headquarters came to Hong Kong to interview the employees to try to find out the perpetrator of the theft.

13.  At his interview on 5^th September 2022, the defendant admitted to having withdrawn the stolen USDT from the two accounts, and that he had used part of the stolen USDT to pay off the mortgage of one property, and for payment of the initial deposit on another.  He also claimed to have withdrawn some USDT for cryptocurrency trading and the purchase of a private car.  

14.  The defendant proposed to repay Zota USD$3 million by instalments, requesting the company to undertake not to commence civil or criminal proceedings against him upon receiving all repayments.  He drafted a settlement letter in similar terms, but tore off the heading of the letter after he finished writing.

15.  Subsequent to this failed attempt to come to a repayment agreement, the matter was reported to the police.

THE ARREST

16.  4 days after the said interview, police officers went to the defendant’s residence on 9^th September to arrest him.  It took the defendant about 2 hours, with repeated warnings from the police of them entering by force if he did not cooperate, before he opened the door to let the officers in.  The defendant was then arrested for theft, whereupon he exercised his right to silence.  

17.  Subsequent investigations confirmed that the defendant had:

1)  between 11^th December 2021 and 16^th July 2022 stole cryptocurrencies of 3.2 million USDT, being the property of Zota; (count 1)

2)  between 12^th February 2022 and 9^th September 2022, together with the above mentioned Deng Wenjing, knowing or having reasonable grounds to believe that cryptocurrencies of 1,500,000 USDT in the defendant’s Binance Account, in whole or in part directly or indirectly represented proceeds of an indictable offence, dealt with the said cryptocurrencies; (count 2)

3)  between 14^th December 2021 and 9^th September 2022, together with the same Deng Wenjing, knowing or having reasonable grounds to believe that cryptocurrencies of 200,000 USDT in Deng Wenjing’s Bybit Account, in whole or in part directly or indirectly represented proceeds of an indictable offence, dealt with the said cryptocurrencies; (count 3)  and

4)  between 19^th February 2022 and 9^th September 2022, together with the same Deng Wenjing, knowing or having reasonable grounds to believe that cryptocurrencies of 1,300,000 USDT in Deng’s brother’s Bybit Account, in whole or in part directly or indirectly represented proceeds of an indictable offence, dealt with the said cryptocurrencies. (count 4)

18.  By his pleas of guilty and admission to the Summary of Facts, the defendant has accepted that he had stolen the 3.2 million USDT in count 1, and had dealt with the USDT in counts 2, 3 and 4 (being 3 million in total), while knowing or believing that they in whole or in part directly or indirectly represented proceeds of an indictable offence.

PREVIOUS CONVICTIONS

19.  The defendant was of clear record.

BACKGROUND AND MITIGATION

20.  The defendant was born in Hong Kong in 1995 and is 29 years old.  He obtained his university degree in the United Kingdom, and joined Zota upon graduation.

21.  Mr. Lawton Leung, counsel for the defendant, told the court that the defendant committed the offences out of greed.  He pointed out that the defendant had made frank and immediate admissions upon being questioned in the September 2022 interview with Zota.  The theft was committed over a period of 7 months, being a short period of time when compared to similar breach of trust cases.

22.  In relation to the money laundering, Mr. Leung submitted that they were relatively simple in their execution, utilizing the defendant’s girlfriend and her brother’s accounts in addition to his own, without any outsiders.

23.  Mr. Leung stated in his written submissions that, despite the amount stolen will almost inevitably lead to a starting point near the statutory maximum, the court should, nevertheless, take into consideration the mitigating factors above and adopt a lower starting point.

24.  Mr. Leung submitted that since all the money laundering activities were conducted shortly after the theft, their sentences should be made concurrent to that for the theft.

SENTENCING

25.  The maximum sentence on conviction upon indictment for the offence of theft is 10 years’ imprisonment, while that for the offence of money laundering is that of 14 years’ imprisonment.  

COUNT 1

26.  It is not disputed that this is a case of theft that involved an element of breach of the trust reposed in the defendant.

27.  In the case of HKSAR v Cheung Mee Kiu [2008] 1 HKC 113[5], the Court of Appeal confirmed the need to consider the following matters when sentencing in a breach of trust case[6]:

(i)  the quality and degree of trust reposed in the offender including his rank;

(ii)  the period over which the fraud or the thefts have been perpetrated;

(iii)  the use to which the money or property dishonestly taken was put;

(iv)  the effect upon the victim;

(v)  the impact of the offences on the public and public confidence;

(vi)  the effect upon fellow-employees or partners;

(vii)  the effect on the offender himself;

(viii)  his own history;

(ix)  those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between him being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.

28.  The Court also laid down the guideline sentencing tariffs below:

“(a)  over $15 million — 10 years or more;

(b)  $3 million to $15 million — 5 to 10[7] years;

(c)  $1 million to $ 3 million — 3 to 5[8] years;

(d)  $250,000 to $1 million — 2 to 3 years;

(e)  less than $250,000 — less than 2 years.”

29.  In the present case, the defendant was the only employee entrusted to reconcile the two cryptocurrency accounts of Zota.  His duty was to spot any discrepancies or irregularities in the two accounts and to report them if found.  The trust reposed in the defendant with regard to the operation of the two accounts that he stole from was significant.  

30.  Although there is only one count of theft, the theft of the USDT were by way of multiple transactions and transfers from the two accounts.  The defendant’s planned and premeditated stealing was committed over a period of 7 months.  The fact that the defendant himself was the only person responsible for their reconciliation made it easy for him to conceal his theft, and as such, the actual stealing did not appear to have required much sophistication in its execution.

31.  There is no suggestion of the defendant’s commission of the theft was due to anything other than greed.  The defendant did admit to the theft when first confronted at the interview, although he had then torn off the heading of the proposed settlement letter.

32.  I have been told that a total of about HK$8 million worth of cryptocurrencies linked to the theft had either been seized or frozen and that they will likely be able to be returned to Zota.  With the pending civil proceedings where further sums will be recovered, it is likely that the theft would not have had a huge effect on Zota.

33.  Having said that, Zota is in the business of providing technological support to global network payment solutions, and the fact that a theft had occurred from within the back office must have had a negative impact on the company’s reputation, and by extension on the public’s general confidence over cryptocurrency transactions as well.

34.  The defendant’s fellow employees would likely to have been astounded by the fact that the stealing was done by the person tasked with watching over the two accounts, but it is doubtful that they would have suffered any serious negative effect.

35.  Mr. Leung referred to the case of HKSAR v Chan Yiu Choi HCCC 110/2024, where an accounting clerk of a hotel stole around HK$26 million over a 4-year period by forging check signatures, altering check payees, manipulating the computer system to conceal his thefts.  The stolen money went towards maintaining a luxurious lifestyle.  An overall global 10 year starting point was adopted for the 9 theft charges.

36.  I find the defendant’s theft can be regarded as slightly less serious than those in Chan Yiu Choi in that the money was stolen over a shorter period, and about 1 million dollar less.

37.  Having considered all the matters referred to above, I find that an appropriate starting point for the defendant’s theft is that of 9 years’ imprisonment.

38.  For the mitigating factor of the defendant’s assistance to authorities, which is dealt with below, I will grant him a 3-month discount, leading to a sentence of 8 years 9 months’ imprisonment.  The sentence after plea would, therefore, be 70 months’ imprisonment.  

THE MONEY LAUNDERING COUNTS

39.  In the case of HKSAR v Hsu Yu Yi (許有益)  CACC 159/2009 the Chinese division of the Court of Appeal identified the following sentencing principles in money laundering cases, as set out in the judgment given by Cheung JA:

“9. There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)  It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2)  The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant’s level of participation and the number of occasions on which he is involved in the ‘money laundering’ activities are relevant factors to be considered.

(3)  The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.

(4)  If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s reputation as an international finance and banking hub from being tarnished.

(5)  The length of time the offence lasted.”

40.  In the case of Secretary for Justice v Wan Kwok Keung (雲國強)  [2012] 1 HKLRD 201, CAAR 13/2010, the Court of Appeal referred to Hsu Yu Yi, where a number of previous sentencing cases were reviewed, and made the following observations:

“The sentencing starting point is 3 years or so where the ‘black money’ involved is between 1 million and 2 million dollars, 4 years or so where it is between 3 million and 6 million dollars, and could be over 5 years where it is above 10 million dollars.”

41.  The respondent in Wan Kwok Keung had laundered money on ‘thousands of occasions’ for as long as 7 years and the total amount involved was $14 million.  The money he had laundered was from bookmaking offences in which the Respondent himself had participated.  The Court was of the view that the appropriate starting point should not be lower than 4 years.  

42.  While the Court’s observations in Wan Kwok Keung regarding sentences is not meant to be guidelines, they are, nevertheless, useful for maintaining some consistency in sentencing, and will be taken into consideration when deciding on the appropriate sentence in the present case, which I now turn to.  

43.  The defendant was the person who stole the USDT that was laundered.  The amount in the 3 counts are as follows:

Count	USDT laundered	Period laundered (all ending on 9th September 2022)	HK$ equivalent @7.8125
2	1.5 million	7 months	11.72 million
3	200,000	9 months	1,562,500
4	1.3 million	7 months	10.16 million
Total:	3 million		23.44 million

44.  In relation to count 3, the defendant’s Binance account linked to Wallet D, and which had received 200,000 of the stolen USDT, the account was registered in the defendant’s name on 27^th September 2021, and linked to Wallet D.  There were frequent logins between 24^th June and 5^th September 2022 from the Internet Protocol (“IP”)  address associated with the defendant’s home.  The 200,000 stolen USDT were received from Wallet C, and then transferred to Deng’s Binance account in the form of 3 different types of cryptocurrencies.  As at the time of the defendant’s arrest, the defendant’s Binance account held cryptocurrencies with a total market value of HK$637,991.20.

45.  In relation to count 2, Deng’s Bybit account linked to Wallet F, and which had received 1.5 million of the stolen USDT, investigation revealed that this Bybit account was registered in Deng’s name, with frequent logins from Deng and the defendant’s home between 2^nd and 14^th August 2022.  Various withdrawals of cryptocurrencies were made between 20^th February and 10^th August 2022.

46.  In relation to count 4, the Bybit account registered in the name of Deng’s brother and linked to Wallet H, there were also logins from the IP address associated to Deng and the defendant’s home between 14^th July and 17^th August 2022. This account received 1.3 million of the stolen USDT.

47.  It is stated in the Summary of Facts that the defendant together with Deng had access and control of Deng’s brother’s Bybit account at all material times, from which various withdrawals of cryptocurrencies were made between 21^st February and 14^th July 2022.

48.  Investigation of the mobile phones of the defendant and Deng showed a series of suspicious WhatsApp messages of them discussing withdrawals and disposal of moneys and cryptocurrencies, which also touched upon “loophole of the company’s system”, “making and editing screenshots to explain and procure unlocking of locked or frozen wallets/accounts” and “using Deng’s brother’s Bybit Account”.

49.  Further investigation showed that the defendant had bought a private car in April 2022 at HK$389,000 with an outstanding car loan of HK$311,200.  The sale and purchase of the home of the defendant and Deng was completed on 20^th April 2022.

50.  Bank records of a total of 13 bank accounts held in the name of the defendant, and 2 in Deng’s name, showed that the defendant had dealt with the proceeds generated from the stolen USDT by way of transfers in Hong Kong dollars, stock trading, and real-estate purchase.

51.  The defendant’s money laundering activities involved some sophistication, utilizing multiple bank accounts, either in the defendant’s own name or Deng’s name.  The laundering was done over a period of 7 to 9 months, with the defendant committing the underlying predicated offence.

52.  Taking into consideration all the above matters, and bearing in mind the Wan Kwok Keung observations, I will adopt a starting point of  5 years’ imprisonment for counts 2 and 4, and 3 years 6 month’ imprisonment for count 3.  

53.  In view of the total amount of money laundered as charged, being approximately HK$23.4 million, the fact that the predicate offence was that of theft and not more serious crimes such as trafficking in dangerous drugs, but that it had taken place over a period of 7 to 9 months, involving multiple accounts, despite the laundering being not too sophisticated but again taking into consideration all the above mentioned matters related to the defendant’s laundering, I find that an overall global starting point of 6 years is appropriate.

54.  For the mitigating factor of the defendant’s assistance to authorities, which is mentioned above and dealt with below, I will grant him a 3-month discount, leading to a sentence of 5 years 9 months’ imprisonment.

55.  The combined sentence for the 3 counts after plea would, therefore, be 46 months’ imprisonment.

56.  To achieve this sentence, I will sentence the defendant on count 2 and 4 to 3 years 4 months’ imprisonment and count 3 to 2 years 4 months’ imprisonment, after plea.  I order 6 months of the sentence in count 3 to be served consecutively to the sentence in count 2, and the balance as well as the sentence for count 4 to be served concurrently, resulting in the sentence of 3 years 10 months for the 3 counts, after plea.

THE MITIGATING FACTOR

57.  As mentioned above, Zota had initiated civil proceedings to recover the full value of the stolen USDT.

58.  The defendant, through Mr. Paul Leung, informed the court that he will not be resisting the claim and, in fact, it has always been his position that all cryptocurrencies, money and properties that he held and that which stemmed from the stolen USDT can and should go towards the returning of the value of the stolen USDT.  As mentioned above, about $8 million’s worth of cryptocurrencies has been seized or frozen, and would likely to be returned to Zota eventually.

59.  It is the prosecution’s position that any proceeds that is in excess of the civil claim of Zota, and that which is connected to the theft or the money laundering will be made the subject matter of an application for a confiscation order.  Given the priority the Zota claim has over the prospective confiscation order, and the possibility that there may be no property left to be confiscated, the prosecution will hold off the application until the conclusion of the civil matter.

60.  Mr. Paul Leung, very fairly, conceded that the non-resistance of the recovery of the proceeds would not amount to restitution, but would nevertheless invite the court to consider this as some form of assistance towards the return of the stolen property and the conclusion of the case.

61.  I have noted that, as disclosed in the Summary of Facts, the defendant had actually proposed to repay USD$3 million to Zota in the September interview, but he had gone back on his proposal at the end of that interview and had torn up the proposed settlement agreement.

62.  Be that as it may, I find that the cooperative stance of the defendant towards police investigations, and his indication to not contest the civil proceedings at this stage of the criminal proceedings are matters that should be taken into consideration under the general heading of the mitigating factor of assistance to authorities.

63.  If the defendant maintains this stance, and, despite what happened at the September interview, there is no evidence that he would not be so maintaining, much time and effort would have been saved and such conduct ought to be recognized by way of a reasonable reduction in sentence, as applied above.

CONSECUTIVE OR CONCURRENT SENTENCES AND TOTALITY

64.  The next matter to be dealt with is whether the sentence in count 1 should be served consecutively to the sentence for the 3 counts, and if so, should that be wholly or partially.

65.  In the case of HKSAR v Ngai Yiu Ching CACC 107/2011, the Court of Appeal provided some guidance as to how to approach the matter in their adopting of the following passage from a decision of the New South Wales Court of Criminal Appeal in Cahyadi v The Queen 168 A Crim R 41:

“…… there is no general rule that determines whether sentences ought to be imposed concurrently or consecutively. The issue is determined by the application of the principle of totality of criminality: can the sentence for one offence comprehend and reflect the criminality for the other offence? If it can, the sentences ought to be concurrent otherwise there is a risk that the combined sentences will exceed that which is warranted to reflect the total criminality of the two offences. If not, the sentences should be at least partly cumulative otherwise there is a risk that the total sentence will fail to reflect the total criminality of the two offences. This is so regardless of whether the two offences represent two discrete acts of criminality or can be regarded as part of a single episode of criminality…” (emphasis added)

66.  The approach in Ngai Yiu Ching was adopted in the case of HKSAR v Chan Kim Chung Nelson  [2012] 2 HKLRD 263; CACC 432/2010:

“17. These considerations lead naturally to the approach which a court should adopt in sentencing an offender who is guilty both of the predicate offence and a connected s. 25 offence (money laundering offence). The question for the purpose of sentence of the s. 25 offence must always be whether its commission adds anything to the culpability disclosed by commission of the predicate offence. If it does, then that extra culpability must be reflected in the overall sentence imposed. If, however, the s. 25 offence adds nothing, then an effective additional sentence for the s. 25 offence should not be imposed, for doing so would in effect be to punish the offender twice the same conduct...” (emphasis added)

67.  In determining whether the sentence for the theft would have comprehended and reflected the criminality for the money laundering offences, and whether the latter had added anything to the defendant’s culpability, I have taken into consideration the following matters.

68.  According to the Summary of Facts, the laundering of the stolen USDT began in a matter of days after they had been withdrawn from Zota’s accounts, with the use of cryptocurrency accounts registered in the defendant’s girlfriend Deng’s or her brother’s name, adding to the concealment of the theft.

69.  In the course of the laundering, some of the stolen USDT had been converted into other cryptocurrencies, which would likely have had the effect of making the tracing of the source of the USDT more difficult, and in turn render investigation of the theft more difficult.  The conversion of the USDT would also have the effect of making their recovery more difficult, affecting any possible confiscation proceedings.  This must also have been the intention of the defendant.

70.  The use of part of the stolen money for trading in stock and purchase of property would affect the legal rights of the opposing parties, requiring them to be engaged in lengthy legal proceedings to assert their rights, and should they fail to do so, suffer the resultant losses.

71.  As such, I find that the sentence for the theft alone would not comprehend and reflect fully the defendant’s overall culpability, and I will order part of the money laundering sentence to be served consecutively to the theft sentence in order to so properly reflect.

72.  Taking a step back in applying the principle of totality, and having taken into consideration the above mentioned mitigating factor, I order that 8 months of the sentence for the money laundering charges should be made consecutive to the theft sentence, the balance to be served concurrently, resulting in the overall sentence after plea for all 4 counts of 6 years 6 months’ imprisonment.  I find that this is a fair, just and balanced sentence that would properly reflect the defendant’s overall culpability.

[1] Contrary to section 9 of the Theft Ordinance, Cap.210

[2] Contrary to section 25(1)  of the Organized and Serious Crimes Ordinance, Cap. 455, and commonly referred to as ‘money laundering’

[3] “Stablecoins are virtual assets that are designed to maintain a stable value relative to certain assets, typically currencies.”: from the website of the Hong Kong Monetary Authority

[4] Ms. Deng Wenjing (鄧文靜)  was originally jointly charged with the defendant in counts 2, 3 and 4, but as a result of plea bargaining, all charges against her were withdrawn upon the defendant pleading guilty to all 4 counts: Return Day Record at page 48 of the Committal Bundle

[5] As read in conjunction with HKSAR v Ng Kwok Wing (吳國榮)  [2008] 4 HKLRD 1017; CACC 398/2007

[6] R v Barrick (1985)  81 Cr App R 78, and R v Trevor Clark [1998] 2 Cr App R 137, as applied in Cheung Mee Kiu, below

[7] As refined in Ng Kwok Wing, supra

[8] ditto