HKSAR v. Ko Kang-suk and Another

DCCC 348/2021

[2022] HKDC 1146

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 348 OF 2021

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REASONS FOR SENTENCE

1.D1 and D2 are jointly charged with 2 offences of "Conspiracy to steal" (Charges 1 and 2). They pleaded not guilty to both charges and were convicted after trial. D1 also faces a charge of "Breach of condition of stay" (Charge 3), to which he pleaded guilty.

2.I have summarized the evidence in my Reasons for Verdict and need not repeat them here.  In short, D1 and D2 have conspired together and with other persons to obtain cash from several Bitcoin ATMs without transferring Bitcoins (of equivalent monetary value)  to the owners of the respective ATMs.

Charge 1

3.Between 5 and 13 August 2020, D1, D2 and other persons executed a plan to steal cash from Bitcoin ATMs owned by HK Bitcoin in Central, Sham Shuip Po and Mongkok on 6 occasions by using the same method to cheat the ATMs.  As a result, HK Bitcoin suffered loss in a total sum of $176,000.

Charge 2

4.On 10 August 2020, D1, D2 and other persons executed a plan to steal cash from Bitcoin ATMs owned by Nitroswap in Tuen Mun and Yuen Long on 3 occasions by using the same method to cheat the ATMs.  As a result, Nitroswap suffered loss in a total sum of $25,100.

Charge 3

5.D1 entered Hong Kong as a visitor on 26 May 2018 and was permitted to remain in Hong Kong until 24 August 2018.  He did not leave Hong Kong and was convicted of "Overstaying" on 12 June 2019.

6.D1 was then required to leave Hong Kong on or before 20 June 2019, but has remained in Hong Kong without authority since.  He was arrested for the present offences on 18 August 2020.

Mitigation

D1

7.He is 40 and has 1 conviction record, which was the "Overstaying" offence mentioned above.  His counsel Ms. Herbert informed me that D1 came to Hong Kong from Korea in 2018.  His current immigration status is a Form 8 holder.  D1 is single and relies on financial support from his father in Korea as well as D1's own day trading activities.

8.In mitigation, Ms. Herbert submitted that the 2 offences of stealing cash from Bitcoin ATMs were not as sophisticated as they seemed.  The culprits simply took advantage of a programming loophole in the ATMs.  The RBF function was not something created by the culprits and it existed for a reason.  Also, the ATM owners (namely PWs 1 and 2)  had made a commercial decision to allow their ATMs to dispense cash before the Bitcoin link was confirmed.  What the culprits did is not prevalent and would not threaten Hong Kong's position as a financial centre.  Ms. Herbert further submitted that the loss suffered by both companies was not substantial.  D1 has no previous conviction of dishonesty offences. 

D2

9.He is 28 and has 1 conviction record, which involved 3 offences related to catering or sale of liquor.  His counsel Ms. Lau informed me that D2 is single and resides with his parents and younger brother.  D2 attended university in England from 2012 to 2014, but did not complete his degree.  He now works a Marketing & Sales Executive in a signage equipment company and coaches an adult baseball team in his spare time.

10.In mitigation, Ms. Lau explained that D2 was cheated twice by his previous business partners upon returning to Hong Kong from England and in 2018 respectively.  In the 2018 business venture, D2's partner left behind unpaid rent and employee wages in the magnitude of about $300,000.  D2's mother ended up spending her savings for retirement to help D2 settle some of his debts.  D2 felt guilty and wanted to repay his mother as soon as possible.  Ms. Lau submitted that D2 met MK in 2020.  He was told that MK came from a wealthy family in Korea.  D2 was eager to earn money to repay his mother and did not think too much about MK's plan.

11.Ms. Lau also stated that D2 is willing to offer $15,000 (the entire reward which he had received from MK)  as compensation to both victim companies.  A bundle of mitigation letters was placed before me; their contents are duly noted.

Sentence

Charges 1 and 2

12.Having discovered a programming loophole in the Bitcoin ATMs was by no means an excuse to steal cash from them. That programming loophole (albeit a deliberate one)  should never be treated as an invitation to abuse the ATMs. To borrow Ms. Herbert's analogy, it would be absurd for a car thief to put the blame on the car owner for not locking the car doors. D1 and D2 must take full responsibility for what they have done.

13.D1 (i.e. MK and MC)  is clearly a smart person and understands well the intricacies of Bitcoin transactions. D2 and those who operated the Bitcoin ATMs may appear as pawns, but the scam could not have been carried out without their participation. Each player perhaps had a different role but each person's culpability is the same in terms of sentencing. There are no sentencing tariffs or guidelines for stealing cash from ATMs of any type (be they conventional or Bitcoin). Based on the amount of cash involved, I consider a basic starting point of 18 months' and 12 months' imprisonment appropriate and just for Charges 1 and 2 respectively.

D1

14.D1 was not a Form 8 holder when he committed the present offences; he became a Form 8 holder after he was arrested. In other words, I should not enhance his sentences for Charges 1 and 2 on this basis.

15.Based on the contents of the text messages sent by MK and MC to D2, D1 obviously played an active and leading role in Charges 1 and 2. I would therefore increase the starting points to 21 months and 15 months respectively. Since D1 is convicted after trial, no guilty plea discount can be given. For the purpose of sentencing of these 2 charges, I treat D1 as having a clear record. I would grant him a discount of 1 month for each charge. Hence, I sentence D1 to 20 months' and 14 months' imprisonment respectively for Charges 1 and 2.

16.For Charge 3, this is D1's 2^nd conviction of "Overstaying". It is plainly a flagrant disobedience of the immigration conditions imposed on his stay in Hong Kong. I consider a starting point of 6 weeks' imprisonment appropriate for having overstayed for 1 year and 2 months. With his timely guilty plea, I sentence D1 to 4 weeks' imprisonment for this charge.

17.Bearing in mind the total amount stolen by the syndicate in Charges 1 and 2, I consider a global starting point of 24 months' imprisonment appropriate for both charges. With the 1-month discount for no previous similar record, the overall sentence is reduced to 23 months. To achieve this, I order 3 months in Charge 2 to run consecutive to Charge 1.

18.I accept that Charge 3 took place at the same time as Charges 1 and 2, but D1 had the choice of not committing further crimes whilst overstaying in Hong Kong. Having considered the totality principle, I order 1 week in Charge 3 to run concurrently with Charges 1 and 2. In other words, the total prison term for all 3 charges is 23 months and 3 weeks.

D2

19.Comparing to D1, D2's role appears to be a foot soldier rather than a leader, but what he did was equally important to the execution of the scam. Hence, I adopt the basic starting point of 18 months and 12 months respectively for Charges 1 and 2. Since D2 is convicted after trial, no guilty plea discount can be given. For the purpose of sentencing, I also treat D2 as having a clear record. I grant him a discount of 1 month for each charge, reducing the sentences to 17 months and 11 months respectively.

20.D2 is willing to disgorge the reward which was given to him by MK, namely $15,000. Although it may not be a meaningful sum for the victim companies, I am prepared to grant a further discount of 1 month to D2. I sentence D2 to 16 months' and 10 months' imprisonment respectively for Charges 1 and 2.

21.Bearing in mind the totality principle, I consider a global starting point of 21 months' imprisonment appropriate for Charges 1 and 2. With the discount of 2 months explained above, the overall sentence is reduced to 19 months. To achieve this, I order 3 months in Charge 2 to run consecutive to Charge 1.