In the matter of Xin & Ors (No 2)
[2023] NSWSC 64
•01 February 2023
Supreme Court
New South Wales
Medium Neutral Citation: Application by the Commissioner of the Australian Federal Police; In the matter of Xin & Ors (No 2) [2023] NSWSC 64 Hearing dates: 01 February 2023 Date of orders: 01 February 2023 Decision date: 01 February 2023 Jurisdiction: Common Law Before: Hamill J Decision: Restraining orders and ancillary orders made pursuant to the Proceeds of Crime Act 2002 (Cth).
Catchwords: CIVIL LAW – proceeds of crime – cryptocurrency – urgent relief – approaching 6pm – restraining orders – ordered requiring defendant to facilitate transfer of bitcoin – undertaking as to damages
Legislation Cited: Proceeds of Crime Act 2002 (Cth), ss 18, 19, 38, 39, Pt 2-1, Div 1
Cases Cited: Application by the Commissioner of the Australian Federal Police; In the matter of Xin & Ors [2023] NSWSC 46
Category: Principal judgment Parties: Commissioner of the Australian Federal Police (Plaintiff)
Steven Hoitou Xin (First defendant)
Yi Ming Wang (Second defendant)
MX Investments Pty Ltd (Third defendant)
MX Seven Investments Pty Ltd (Fourth defendant)
Tara Global Pty Ltd (Fifth defendant)
Wisdom AWCS International Pty Ltd (Sixth defendant)
XT International Trading Pty Ltd (Seventh defendant)
XTAW Investments Pty Ltd (Eighth defendant)
Jin Yang (Ninth defendant)
Ruizhen Wang (Tenth defendant)
Liangfang Shen (Eleventh defendant)
Xiaoli Chen (Twelfth defendant)
Ai Yang (Thirteenth defendant)
Zhaohua Ma (Fourteenth defendant)
Yanhua Jiang (Fifteenth defendant)
Golden Capital Commercial Logistics Pty Ltd (Sixteenth defendant)
Gub Sugar Pty Ltd (Seventeenth defendant)
Harris & Macarthur Pty Ltd (Eighteenth defendant)
Harris & Mary Ann Pty Ltd (Nineteenth defendant)
MJSD Investments Pty Ltd (Twentieth defendant)Representation: Counsel:
Solicitors:
C Muddle (Plaintiff)
Australian Federal Police (Plaintiff)
File Number(s): 2023/32255
Ex tempore JUDGMENT
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Yesterday, that is 31 January 2023, I made a large number of orders on the application of the plaintiff, the Commissioner of the Australian Federal Police (“the Commissioner”), for the restraint of certain properties, orders that are variously both in personam under s 18 of the Proceeds of Crime Act 2002 (Cth) and in rem under s 19, as well as additional orders for such property to come under the care and control of the Official Trustee. I also made a number of ancillary orders which are of not much relevance now. The background is set out, in scanty form, in my ex tempore judgment which is yet to be published,[1] and in some considerable detail in an affidavit of Australian Federal Police Officer Scott Mathews.
1. The judgment was, after delivery of this ex tempore judgment, published as Application by the Commissioner of the Australian Federal Police; In the matter of Xin & Ors [2023] NSWSC 46.
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As I explained yesterday, the application was both urgent and required secrecy because it was anticipated that a number of search warrants would be executed today, 1 February 2023. It was also expected that a number of people would be arrested today. Those anticipations and expectations have come to fruition and one of the defendants, that is the ninth defendant named in the summons, a man called Jin Yang, was arrested after a search warrant was executed at his parents’ home in Epping. Mr Yang is a “suspect”[2] in an investigation into a (reasonably) massive money laundering scheme, some of the details of which I explained yesterday in the ex tempore judgment and which, again, are set out comprehensively by Mr Mathews in his affidavit in support filed yesterday.
2. See Proceeds of Crime Act 2002 (Cth), Pt 2-1, Div 1.
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In the course of the search warrant at the Epping premises, police took possession of the ninth defendant’s mobile telephone. He provided the passcode to allow access to that ‘phone. On the ‘phone, investigators noticed an app called “Huobi” which was known by investigators to be an app allowing people to trade in and store, for want of a better word, various forms of cryptocurrency. When investigators, in turn, went into that app they found evidence that the ninth defendant held an account with a number (as set out in the material) and that account contained the following amounts of cryptocurrency:
440.68137761 units of Ethereum (ETH), equivalent to approximately $698,704.73 USD;
240,743.99686892 units of Tether (USDT), equivalent to approximately $240,743.99 USD;
9.86797627 units of Bitcoin (BTC), equivalent to approximately $228,147.51 USD;
288,112.45837 units of ApeCoin (APE), equivalent to approximately $164,379.16 USD;
0.11388254 units of Dogecoin (DOGE), equivalent to approximately $0.0108 USD; and
0.00992000 units of Ripple (XRP), equivalent to approximately $0.00402 USD.
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It seems that the ninth defendant is not aware, or may not be aware, that the plaintiff is aware of this. Accordingly, I was satisfied for that reason that it was appropriate to hear the application ex parte, urgently and in closed court. That is what has happened this afternoon, from about 4.30pm until now, approaching 6.00pm.
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The risk of the cryptocurrency, as described, being dissipated and thus rendering the restraining orders ineffective was real. I will not repeat what I said yesterday about the nature of the scheme alleged. It is complex, has international tentacles and involves a number of people, some of whom have already been convicted of offences such as money laundering and dealing with the proceeds of crime. I would also simply restate that Mr Mathews suspects that the cryptocurrency, which I have described in this hurriedly prepared and brief judgment, contained in the account referred to previously, or accessible through that account, is the property of the ninth defendant and is within his control.
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The second affidavit of Mr Mathews provides more detail. It is unnecessary for me to go into it, but it does satisfy me of relevant matters pursuant to s 18 of the Act. The plaintiff, that is the Commissioner, is a “proceeds of crime authority”. The evidence, both tendered yesterday and today, means that I am satisfied there are reasonable grounds to believe that Mr Yang has committed “a serious offence”. I set out some of those offences yesterday and will not repeat them today. The affidavit requirements of s 18(3) of the Act are satisfied, and simply note that Mr Mathews holds the suspicions that are asserted on reasonable grounds. I am satisfied that the property subject to the proposed order falls within the description of such property under s 18(2)(a) of the Act: that is, the property is the property of the suspect, that is to say the ninth defendant. For those reasons I will make the restraining orders sought.
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I also will make, for the same reasons I made orders yesterday, orders under s 38 of the Act, placing the property into the care and control of the Official Trustee. To facilitate that, it is also necessary to make an order under s 39(1)(e)(iii), which is “an order directing any person to do anything necessary or convenient to enable the Official Trustee to take custody and control of the property”. That order, as drafted, is directed to both the officers of the Australian Federal Police, particularly those with expertise in cryptocurrency, but also to the ninth defendant himself. I questioned Ms Muddle, who appears for the Commissioner today, as to the necessity of the plaintiff to pay whatever fees and charges are necessary to facilitate that transfer of the property from that account to the Official Trustee, probably through the Australian Federal Police. There are some complications around that based on the quantity of cryptocurrency and the withdrawal limit of 5 Bitcoin per day. The mathematics undertaken by the Australian Federal Police, which I will trust over my own, suggests that that might take 9 or 10 days, and so it is necessary to make that order.
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As I said, I questioned Ms Muddle about facilitating the transfer, particularly in circumstances where he has now been arrested and presumably, unless some grave breach of protocol in the law have been committed (which I doubt), has access to lawyers. Nevertheless, I have agreed to hear this matter, and thought it was appropriate to hear this matter ex parte to determine whether that order was necessary. I am satisfied my queries are comfortably answered by Ms Muddle by reference to the fact, which I note, that the plaintiff has made the usual undertaking as to damages so that if all of this was somehow misconceived, the plaintiff has undertaken to reimburse such charges.
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I am satisfied, based on the above, that the orders provided in what are amended short minutes of orders, which simply made some proofing corrections to those which were filed in court earlier, should be made. I should indicate I will substitute the short minutes of order that were filed in court earlier today with the current amended orders, which were provided during the short adjournment I took to put together these reasons. Accordingly, I make orders in accordance with the short minutes of order, noting the Commissioner’s undertaking as to damages, and those orders will be taken out forthwith.
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Endnotes
Decision last updated: 10 March 2023
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