R v Bigatton

The agreed facts

1. The Parties have agreed to the following facts for the purpose of sentencing.
2. Between about 14 August 2017 and 18 January 2018, the Offender engaged in a course of conduct of providing financial product advice relating to the BitConnect Lending Platform, on behalf of a number of other persons who carried on the financial services business known as BitConnect. The Offender did this without holding an Australian Financial Services licence ("AFSL"), or authorisation to provide financial services.

BitConnect and the lending platform

1. BitConnect was a financial service business and an online cryptocurrency platform offering investment opportunities through the website: www.bitconnect.co. The Lending Platform was promoted as an investment opportunity and in order to participate, investors were required to acquire BitConnect coin ("BCC"), a cryptocurrency token offered by BitConnect through its website. BCC and the lending program were available to anyone irrespective of where they lived.
2. The Lending Platform permitted lenders to invest or "loan" BCC for fixed terms in exchange for promised high interest rates. Investors did not control their loans once invested, nor could they withdraw their capital investment until the expiry of the lending period.

Principals of BitConnect

1. The principals of the financial services business known as BitConnect cannot be ascertained. It is accepted that none of the conditions in s 911B(1)(a)-(e) of the Corporations Act 2001 (Cth) ("Corporations Act") applied.

The Offender's background in financial markets and financial services

1. Prior to his involvement with BitConnect and the Lending Platform, the Offender had training and experience in the financial services industry which provided him with an awareness of the prohibitions on providing unlicensed financial services in Australia.

The Offender was the National Promoter for BitConnect in Australia

1. On or about 18 August 2017, the Offender was appointed to be the National Promoter of BitConnect in Australia.
2. The Offender undertook promotional activities for BitConnect and the Lending Platform on social media, at seminars that he hosted at various locations around Australia, and through face-to-face meetings with investors.
3. The Offender was a part of the affiliate 'Bonus Program' which operated as a referral program, where an investor was paid a commission each time their referred user lent BCC to the Lending Program.

Providing financial product advice without holding an Australian Financial Services licence

1. The Offender provided financial product advice without holding an Australian Financial Services licence or authorisation to provide financial services, on six instances at various locations around Australia through seminars (4) and social media posts (2). On each occasion, he did so on behalf of the Principal(s).

Offender conducted seminars around Australia

1. During the period 4 October 2017 to 22 November 2017, the Offender, in his role as National Promoter for BitConnect in Australia, spoke at, and in some cases hosted (in the case of the Malvern East and WeWork seminars referred to below), four seminars to promote BitConnect and the Lending Platform. Date (on or about)
2. 4 October 2017 The Racecourse Hotel in Malvern East, Victoria
3. 2 November 2017 WeWork offices in Pyrmont, New South Wales
4. 21 November 2017 Rosie O'Grady's Hotel in Northbridge, Western Australia
5. 22 November 2017 The Quality Hotel Lighthouse in Bunbury, Western Australia

1. The seminars were attended by at least 30 people at Bunbury, at least 80 people at Malvern East and approximately 150 people at Northbridge, with the number of attendees at WeWork not known.
2. The seminars at Malvern East and at WeWork were arranged by the Offender.
3. Some of the seminars were promoted through social media and were advertised as "Getting Started in BitConnect" events.
4. A part of each seminar contained information about cryptocurrency generally, including background information about BitCoin.
5. As part of the seminars, the Offender used a PowerPoint presentation that had been supplied to him by BitConnect which provided investors with an overview of BitConnect and the operation of the Lending Platform.
6. The Offender edited the PowerPoint presentation, and inserted a 'Disclaimer' slide, which would occasionally differ in form, but not in substance. The disclaimers stated that the information provided was not "financial advice", that the presenter was "not a financial advisor, accountant or the like". In one version of the presentation, there was also a no liability disclaimer. An example of a disclaimer is as follows: Disclaimer: The information provided is NOT financial advice. I am not a financial adviser, accountant or the like. This information is purely from my own due diligence and an expression of my thoughts, my opinions based on my personal experiences, and the way I transact. THIS INFORMATION IS PROVIDED FOR GENERAL INFORMATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED PERSONAL ADVICE. Your money, your outlay, your risk. This presentation does not provide investing advice in any way shape or form. You will be solely responsible for any decisions you make. If you need to seek any advice, speak to your advisors, accountants or other professionals who you may be relying on for your wealth creation journey. Please do your own due diligence. THE CRYPTOCURRENCY REVOLUTION
7. Oral disclaimers of different kinds were also routinely given by The Offender.

Malvern East seminar

1. On or about 4 October 2017, the Offender was one of four presenters at a seminar at The Racecourse Hotel in Malvern East, Victoria. The other presenters were Dean Tate, Neville Hiatt, and Wayne Connell. At the Malvern East seminar, during the Offender's part of the presentation, the Offender said words or words to the effect of: The value of BitConnect coin is $300-350 USD, and within a month, it will exceed $1,000 USD.
2. This was a statement of opinion which could be reasonably supposed to have been intended to induce persons who heard it to acquire BCC. The Offender qualified this by stating words to the effect of "Do what you want with your money".

WeWork offices seminar

1. On or about 2 November 2017, the Offender conducted a seminar at WeWork Offices in Pyrmont, Sydney NSW.
2. In that Seminar, the Offender made a statement of opinion which could be reasonably supposed to have been intended to induce persons who heard it to make decisions about a financial product offered by BitConnect.

Northbridge seminar

1. On or about 21 November 2017, the Offender spoke as a guest at a seminar at Rosie O'Grady's Bar in Northbridge, Western Australia presented by Wayne Connell. That seminar was hosted by Brett Lowcock and Peter Lomax. Neither Lowcock nor Lomax were persons appointed by the Offender to promote BitConnect.
2. The Offender was introduced by a regional promoter, Mr Connell, as follows: "John Bigatton is a national promotor for BitConnect Australia ... and he has got the inside goss as to what happens. He is a great mentor and friend of mine and helped coach me through my BitConnect journey so far in the last five months which has been insane. So we have had an absolute ball with the program and it is making a good part- time income, of course. So any questions at this point before we hand it over to The Offender Well I will introduce John then. John Bigatton is the national promotor as I said for BitConnect Australia ... John has got a background in forex trading and stocks and shares and all that sort of stuff, very knowledgeable in the crypto space so give him a warm welcome all the way from Sydney"
3. At the Northbridge seminar, the Offender said words or words to the effect of: We already saw the [BCC] prices go from 15 cents in January this year to $295US right now, this January before about 295US. That is a massive growth spurt, right. Is it going to continue? Yes, it will. Where is it going to go to? I don't know. But the expectations are that next year - some time next year we are looking at about $1,000US."
4. This was a statement of opinion which could be reasonably supposed to have been intended to induce persons who heard it to acquire BCC.

Bunbury seminar

1. On or about 22 November 2017, the Offender spoke at a seminar at the Quality Hotel Lighthouse in Bunbury, Western Australia along with others including Russell Lilly and regional promoter, Wayne Connell. That seminar was hosted by Brett Lowcock and Peter Lomax. Neither Lowcock nor Lomax were persons appointed by the Offender to promote BitConnect.
2. At the Bunbury seminar, the Offender said words or words to the effect of: BitConnect is like a Term Deposit, but instead, BitConnect will generate higher returns ... BitConnect is better than any other Term Deposit out there.
3. This was a statement of opinion which could be reasonably supposed to have been intended to induce persons who heard it make decisions about a financial product offered by BitConnect.

Facebook posts

1. On 2 January 2018, the Offender posted a message to the BitConnect Australia Facebook page, in which he provided financial product advice to the members of the BitConnect Australia (later BitConnect Global) Facebook group: BitConect will become untouchable as it grows and expands. They are not here to standstill, they are leading the way into the future. there will be many releases of new technologies, new options, new additions as we grow and develop. When these are released, allow the information to be released also, we do not need hysteria, this causes harm to the individual creating the hysteria, not those who are in control. 2018 will be one of the best years of ones life, I know it will certainly be mine.
2. This was a statement of opinion which could be reasonably supposed to have been intended to induce persons who read it make decisions about a financial product offered by BitConnect.
3. On 18 January 2018, the Offender posted a message to the BitConnect Australia Facebook page, in which he provided financial product advice to the members of the BitConnect Australia Facebook group: It could take a few months for the price to get back up to where it was an beyond. My suggestion is to 'hold' but that decision is up to you 5. Reasons that led to all this include many - Chinese miners dumping BCC on exchanges dropping price - Countries like S. Korea, Vietnam and India, transferring BTC into a local exchange and selling locally because there was a higher value. - DDOS attack that was never expected - Cease and Desist in Texas then NC All of this was drying up the liquidity of BTC on the exchange. This is for any exchange, without BTC it cannot operate. Stability in the market will probably take about 2 - 3 weeks. After this you will more than likely see a rise in price.
4. This was a statement of opinion which could be reasonably supposed to have been intended to induce persons who read it to hold BCC they owned.

The Offender and the Principals did not hold an Australian Financial Services licence

1. During the period of offending, neither the principal(s) nor the Offender held an AFSL or authorisation to provide financial services in Australia.

The Offender provided financial services advice without holding an Australian Financial Services licence

1. The financial service provided by BitConnect was the dealing in a financial product, namely a facility through which a person made a financial investment or non-cash payment. BitConnect was carrying on a financial services business through the operation of the Lending Platform which required members to exchange Bitcoin (purchased using money) for BCC, to be lent to that platform.
2. The Crown is unable to establish beyond reasonable doubt the number of persons in fact induced to buy BCC or to invest in the Bitconnect Lending Platform as a result of the financial product advice given by the Offender. There is however evidence that: 1. two individuals bought BCC or invested in the Lending Platform following the Malvern East seminar; 2. one individual bought BCC or invested in the Lending Platform following the WeWork seminar; 3. one individual bought BCC or invested in the Lending Platform following the Bunbury seminar; 4. two individuals saw the 2 January 2018 Facebook post; and one individual saw the 18 January 2018 Facebook post.
3. 36. On 12 December 2018, the Offender participated in a voluntary record of interview, in which he denied running a financial services business, but admitted the following: "I'm also well aware of financial services, that you cannot give general advice, nor can you give personal advice to people unless you have a licence ... When it comes to cryptocurrencies, extremely high risk, so in the education it was all mentioned that it is high risk and that you need to be consulting a financial adviser, or an accountant - as long as they have a licence to be a financial adviser ..."

The non-agreed facts

1. There are a series of facts which, whilst agreed as a matter of fact between the parties, on behalf of the Offender it has been submitted are irrelevant to the sentencing process.
2. I set out those facts below: The Offender was the National Promoter for BitConnect in Australia 1. The Offender also appointed six regional promoters of BitConnect. The regional promoters were directed to host and conduct seminars to promote BitConnect and the Lending Platform. In return, the regional promoters received a percentage of the funds attributable to the value of the investments made into the Lending Platform by investors by their referral. All BitConnect investors including regional promoters received such a percentage in respect of persons who invested upon their referral. 2. On or about 23 August 2017, the Offender registered the web domains 'www.bccaustralia.com' and 'www.bitconnectaustralia.com.au' and set up an email service for the web domains and created the email address 'john@bitconnectaustralia.com.au'. 3. On or about 24 August 2017, the Offender registered the business names 'Bitconnect cryptocurrency education' and 'Bitconnect Australia'. 4. On or about 24 August 2017, the Offender leased office facilities through a co-working building operated by WeWork located at 100 Harris Street, Pyrmont NSW 2009 in the name of 'BitConnect Cryptocurrency Education' (WeWork Office). 5. The Offender attended a number of overseas events as the National Promoter for Australia where he came into contact with other national promoters and an international representative Satish KUMBHANI. The Offender attended: (a) meetings with "other bitconnect top promoters" in Vietnam on about 21 September 2017 and 22 September 2017; (b) the "1st BitConnect Annual Ceremony" held in Thailand on or about 28 October 2017 and 29 October 2017; and (c) a meeting of "National Leaders" of BitConnect held in Dubai on or about 16 December 2017 and 17 December 2017. The description the Offender gave to investors as to his position 6. The Offender described himself to investors as holding a leadership position in Australia for BitConnect. Offender conducted seminars around Australia Malvern East seminar 7. On or about 6 October 2017, the Offender had a Facebook messenger conversation with Neville Hiatt: HIATT: hey John forgot to ask post wed night meeting when you said bcc was going to $1,000 next year, who's said that and what rational have they used? BIGATTON: Lol The group in Vietnam said that Just saying.. HIATT: now I really want to know their thinking, i did like your million dollar bitcoin explination too BIGATTON: ask them in Thailand HIATT: but i dont want to wait that Iong ... just saying BIGATTON: lol.. I couldn't be bothered asking BitConnect closes the Lending Platform 8. On 20 January 2017, BCC was listed on coinmarketcap.com (a website for tracking the market capitalization of various cryptocurrencies) with a value of $0.162671 USD. By 4 January 2018, the value of BCC had increased to $447.53 USD - an increase of 275,014%. 9. On 17 January 2018, following receipt of cease and desist orders issued by the Texas State Securities Board (on 4 January 2018) and the North Carolina Secretary of State (Securities Division) (on 9 January 2018), BitConnect announced that they were closing the Lending Platform and it was abruptly shut down. 10. Investors incurred significant financial losses as a result of the closure of the Lending Platform.
3. At the sentence hearing, I concluded the above facts were relevant. I will now explain why. In my view, those contested facts do have some relevance to the issues that I need to determine for the purpose of sentencing. In relation to paragraphs [1] to [7], they provide some relevant contextual background to the level of involvement by the Offender in what was clearly an organised and business-like operation with which he was involved and in which he held, at least by way of virtue of his title, a high office. I consider paragraph [7] shows the potential impact of the Offender's statements, at least as an example, and paragraphs [8], [9], and [10] are relevant because they demonstrate that the Offender ceased his activities only because of the collapse of the overall BitConnect scheme, rather than as a consequence of seeing the error of his ways.

Governing approach

1. In sentencing the Offender, I am required to have regard to Part 1B of the Crimes Act 1914 (Cth) ("Crimes Act").
2. The fundamental principle in sentencing a federal offender is that the Court must impose a sentence "that is of a severity appropriate in all circumstances of the offence": s 16A(1) of the Crimes Act. To arrive at such a sentence, the Court "must" have regard to a number of particular factors as set out in s 16A(2), so far as they are "relevant and known" to the Court.
3. The list of factors in s 16A(2) is not exhaustive. In particular, although not referred to specifically in s 16A(2), other key common law principles of sentencing, such as parity, proportionality, and totality, also apply, since they are relevant to fixing a sentence "of a severity appropriate in all the circumstances of the offence", as required by s 16A(1).
4. Subject to limited statutory exceptions, s 16A of the Crimes Act requires an "instinctive synthesis" of all relevant considerations.

Principles for sentencing s 911B of the Corporations Act

1. Section 911B is a part of Chapter 7 - Financial Services and Markets, of the Corporations Act. Part 7.1, s 760A of the Corporations Act sets out the objects of Chapter 7 in the following terms: The main object of this Chapter is to promote: (a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and (b) fairness, honesty and professionalism by those who provide financial services; and (c) fair, orderly and transparent markets for financial products; and (d) the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.
2. The purpose of s 911B includes protecting members of the public from the conduct of unqualified and untrained persons, by ensuring that financial intermediaries uphold high standards within the financial services industry.
3. In my judgement, conduct contrary to s 911B(1) represents a breach of trust. Community members who receive financial product advice in Australia have a right to believe that it is being given by those qualified to provide it. Unlicenced operators undermine trust and confidence in Australia's financial services industry, which acts as a barrier to consumers seeking important financial advice. This may lead to a reduction in both domestic and international investment, which is necessary for Australia's economic growth, or at the very least, poor investment decisions, which are not just detrimental to individuals, but to the entire market, which becomes uninformed and therefore inefficient. As I have said, there is a real public interest in the provisions of this Part of the Corporations Act being scrupulously complied with by people seeking to profit from the promotion of financial products.

Nature and circumstances of the offence (s 16A(2)(a))

1. The conduct represents a continuous course extending over a period of approximately five months. The offending ceased after BitConnect, which was a world-wide operation seemingly centred in the United States, announced it was closing the Lending Platform following a cease-and-desist order issued by the Texas Securities Board on 17 January 2018 and by the North Carolina Secretary of State on 9 January 2018.
2. I am satisfied beyond reasonable doubt that the Offender well knew he was not entitled to provide financial product advice without a licence or the proper authorisation. He freely and openly admitted in an early voluntary record of interview that he was "well aware of financial services, that you cannot give general advice, nor can you give personal advice to people unless you have a licence …". The Offender's knowledge of the regulatory scheme is further displayed in the 'Disclaimer' slides as well as his oral disclaimers such as "Do what you want with your money", or "you should get your own financial advice".
3. Despite the Offender knowing that he was not permitted to give financial product advice, the Offender did just that on a number of occasions. The more contraventions or episodes of criminality that form part of the rolled-up offence, the more objectively serious the offence is. In this case, the Offender provided financial product advice on six occasions through four seminars at various locations around Australia and in two social media posts.
4. The offence is not concerned with whether the Offender provided financial products advice that was dishonest, inherently false, or even misleading, there is no suggestion of that here. The heart of the offence is that the advice was provided without the requisite authorisation or licence. Absence of that authorisation removes the scrutiny that comes with that authorisation and carries with it the risk of a failure to adhere to appropriate standards in the provision of financial advice.
5. The offending involved a degree of pre-meditation, planning, and sophistication to ensure that the financial product advice the Offender provided could influence a large number of people. This is evidenced by the steps the Offender took in preparation for the seminars and him being held out in a leadership capacity. The Offender had a significant position in BitConnect. He was a not a minor or naïve outsider.
6. Whilst there is no direct evidence, I infer that the Offender was motivated by a desire for personal financial gain. The Offender was part of the affiliate 'Bonus Program' which operated as a referral program, where an investor was paid a commission each time their referred user lent BCC to the Lending Program. I do not know if the Offender made any money himself, but I do not think that matters. The point is he did what he did in the hope of making money for himself.
7. The Offending involved a breach of trust in that the recipients of the financial product advice were entitled to have an expectation that they were receiving advice from a sufficiently licenced and regulated individual. The Offender was willingly presented to potential investors, by a regional promoter whom he had appointed, as someone with "the inside goss", "a great mentor and friend", "a background in forex trading and stocks and shares", and "very knowledgeable in the crypto space".
8. Having regard to all of the circumstances, the Crown has submitted that the offending is serious because the Offender has undermined the operation of the licencing scheme on a number of occasions in planned communications about a risky investment to a large number of recipients.
9. On the other hand, on behalf of the Offender the following considerations and submissions have been emphasised: 17. … (1) The number of instances of the provision of financial advice. The facts before the Court indicate that there were six instances. Four instances were at seminars. Two were in the form of posts on Facebook. (2) The number of people to whom financial advice was given. As to this: (a) The seminars were attended by at least 30 (Bunbury), at least 80 (Malvern East) and approximately 150 people (Northbridge). The Crown cannot establish beyond reasonable doubt the number present at the WeWork Offices seminar. A finding that there was any number of persons in excess of one present (the bare minimum required to make out of the offence) is a finding adverse to the offender that must be proven beyond reasonable doubt. (b) The 2 January 2018 Facebook post was seen by one person. (c) The 18 January 2018 Facebook post was seen by two people. (3) The duration of the offending. The offending pleaded to involves four instances of advice at seminars (October-November 2017) and two Facebook posts (both in January 2018). The total period was four months. (4) Whether the offending was reckless, inadvertent or deliberate. There is no doubt that Mr Bigatton was aware of the prohibition on giving advice without a licence. However, it appears that he was seeking to comply with that prohibition, but failed to do what was necessary to comply. For example, the Powerpoint presentation that was habitually used contained a disclaimer that had been inserted by him (albeit an ineffective one). He also routinely gave oral disclaimers of different kinds. It ought be inferred that Mr Bigatton gave such disclaimers at each of the seminars in question. Such a finding of fact is favourable to Mr Bigatton and need only be made on the balance of probabilities. The only logical purpose of the inclusion of disclaimers is to either (a) comply (albeit inadequately) with the regulatory regime that existed; or (b) to discourage people from making investments on the basis of statements of opinion or recommendations made by him. The submissions made by the Crown to the effect that the disclaimers were "ultimately perfunctory and self-serving" (cf Crown Submissions, para 17) should be rejected. (5) Whether the statement was intended to induce persons who heard it to make a decision in relation to a financial investment, or whether it could only be reasonably supposed to have been so intended. The plea is entered on the basis that each of the statements relied upon by the Crown could only be reasonably supposed to have been intended to induce persons who heard it to make a decision in relation to a financial investment. 18. Further, it is a matter that reflects on the Accused's culpability that the stated public position of ASIC (the regulator and the informant in these proceedings) at the time of the relevant offending was that cryptocurrency was not a financial product.11 19. While it is accepted that it is open to the Court to conclude that Mr Bigatton had a financial motivation, it is not open to the Court to conclude that he in fact received a financial benefit as a consequence of the offending. 20. The submission that the offending involved a breach of trust (Crown Submissions, para 23) must be rejected. It is wholly inconsistent with the disclaimer included on Powerpoints used and provided by Mr Bigatton which commenced "Disclaimer: The information provided is NOT financial advice. I am not a financial adviser, accountant or the like". A person seeing this could have had no reasonable expectation that they were "receiving advice from a sufficiently licenced and regulated individual" and in circumstances where Mr Bigatton was displaying such disclaimers, it should not be concluded that he held himself out as such a person.

Resolution as to nature and circumstances of offending (s 16A(2)(a))

1. So, it can be seen that the parties are largely ad idem in their descriptors of the offending. There is really one central matter of contest. On the one hand, the Crown contends that I should be satisfied beyond reasonable doubt that the Offender's various "disclaimers", to the effect that he was not providing financial advice, were no more than a cynical ploy by him to paper over what he knew was the provision of financial product advice. The Crown brands the disclaimers as "ultimately perfunctory, self-serving, and inconsistent with advice actually given". This is said to be significant in relation to an assessment of his moral culpability.
2. The Offender, relying on the very same evidence, that is the disclaimers themselves, contends to the opposite effect. The Offender submits that the disclaimers demonstrate firstly, that the Offender was aware that he was operating in a regulated framework, secondly, that he was conscious to seek to comply with the laws and regulations, and thirdly, that he took positive steps not just to tell people that he was not providing financial advice, but to recommend to them as part of his overall advice that they do get financial advice from someone else.
3. I am not satisfied beyond reasonable doubt as to the Crown's submission that the disclaimers were a cynical and deliberate ploy to cover up wrongdoing by the Offender. However, I am also not satisfied on the balance of probabilities that the Offender's motives were as pure as he now contends them to be.
4. Accordingly, in relation to the Offenders motivation for providing the disclaimers, I am not in a position to make any findings one way or the other apart from what the Offender immediately conceded in his record of interview. The Offender did know and understand that, absent his disclaimers, what he was doing was the provision of financial advice which was contrary to the law. He wrongly and, at least in my opinion recklessly but honestly nonetheless, thought that the disclaimers allowed him to do the very thing the section prevents, that is to give financial product advice.
5. I also think, objectively regardless of what he thought he was doing, the offending does amount to a breach of trust in the way I have explained it.
6. All in all, I have concluded that the example of offending here is somewhere around the mid-range of objective seriousness for this type of offence.

Personal circumstances of any victim and injury, loss, and damage (s 16A(2)(d)-(e))

1. I accept the Offender's submissions to the effect that the identities of any asserted victim are not before the court, and nor is there any evidence of injury, loss, or damage said to have been suffered by any of them.
2. Bitconnect was far larger than The Offender. It was a world-wide operation that has attained some notoriety. In Australia, there is no suggestion that Bitconnect was (or that involvement in Bitconnect was) inherently unlawful. The Offender can only be held responsible on sentence for loss or damage that he has been shown, beyond reasonable doubt, to have caused by his offending.
3. The Offender has pleaded guilty to a course of conduct involving six discrete instances of the provision of financial advice. There is no agreed fact as to any losses that he is responsible for. There is nothing that would justify an inference that could be reached to any level of satisfaction that he was in fact responsible, by the provision of the advice, for any losses. Proof of the mere acquisition of BCC or participation in the Lending Program is not enough to establish the causing of loss beyond reasonable doubt.
4. For the purpose of sentencing, I am not satisfied that any injury, loss, or damage has been caused by the Offender's conduct.

Contrition (s 16A(2)(f)) and the plea of guilty (s 16A(2)(g))

1. The Offender's plea of guilty is some evidence of contrition that should be taken into account under s 16A(2)(f) of the Crimes Act: Cameron v The Queen (2002) 209 CLR 339 at [11]. His cooperation with ASIC is consistent with this.
2. The Crown acknowledges that contrition, as well as acceptance of responsibility and willingness to facilitate the course of justice, may be shown by an offender's decision to enter a plea of guilty. However, the Crown has reminded me that the degree of contrition shown by a guilty plea must depend on the motivation underpinning the offender's decision to enter a plea of guilty and the strength of the Crown case: R v Adler [2005] NSWSC 274.
3. The Crown submits that the plea of guilty itself was no more than "an acceptance of the inevitable in the face of an overwhelmingly strong Crown case": Baden v The Queen [2020] NSWCCA 23, quoting Cameron v The Queen (2002) 209 CLR 339.
4. I agree. In my opinion, the Crown case was extremely strong. There is no doubt on the evidence, most of which was documentary being slides and the like, or audio being recordings of what was actually said at the seminars, that financial product advice was provided by the Offender. The only real issue that would have delayed a jury was the question of whether, in the context of the various disclaimers, somehow what objectively was financial product advice could be held to not have that character. Whilst that issue was not unarguable from the Offender's perspective, I do think it was highly likely that the Offender would have been convicted following a trial.
5. In Commonwealth matters, the Court must take into account the fact of the Offender's plea, the timing of the plea, and the degree to which these matters resulted in any benefit to the community or any witness to the offence.
6. It is desirable to specify the discount given for a guilty plea in the interests of transparency: Huang aka Liu v R [2018] NSWCCA 70 at [9]: Xiao v R [2018] NSWCCA 4 at [279]-[280]. However, the quantified discount should only reflect the utilitarian benefit and not any reduction resulting from the subjective implications of a plea such as the demonstration of remorse or a willingness to facilitate the course of justice: Bae v R [2020] NSWCCA 35 at [57].
7. The plea was entered several weeks before trial. However, the utilitarian value of the plea in this case is considerably greater than the timing of it would indicate.
8. The trial was estimated to take 8 weeks and would have involved in excess of 50 witnesses, including many from interstate. The benefit to many witnesses in not having to give evidence is significant. The benefit to the community, in not having to expend considerable amounts of public resources on a trial, is, in the context of this case, substantial.
9. Notwithstanding my views of the strength of the Crown case and the late timing of the plea, I think for that utilitarian benefit to the community, the Offender is entitled to a discount of about 20%.
10. However, the plea on its own is not the end of the matter because I have before me numerous character witnesses, together with the psychological report prepared by Dr Kala Ram, all of which are replete with statements which I accept that the Offender is genuinely contrite and remorseful as to the fact that he has offended against the criminal law. I accept that evidence and am satisfied that the Offender is contrite and remorseful and moreover, and this is a significant finding for the purpose of my ultimate decision, I am satisfied that there is close to no prospect that the Offender will reoffend.

Cooperation with law enforcement (s 16A(2)(h))

1. The Offender cooperated with law enforcement agencies in the investigation of the offence.
2. Significantly, he gave an interview to police on 12 December 2018 without legal representation and against advice to exercise his right to silence in which a number of admissions were made about BitConnect and his role in it. As far as I can tell, the Offender has always accepted the basic facts contended for by the Prosecution. He has strenuously contested the legal consequences that flow from those facts, but that is a different matter. Whilst the Offender took a number of interlocutory points before me and on appeal, they each raised complicated and, in some cases, novel questions of law each of which, although ultimately, I think I found most of them contrary to the Offender's position, were more than arguable. The fact the Offender took such positions during the course of the prosecution to my mind is not inconsistent with the finding that he generally cooperated with the prosecuting authorities in the factual investigation.

Subjective matters: character, antecedents, age, means, and physical or mental condition (s 16A(2)(m))

1. The Offender has no prior convictions. His character references reveal him to be a man of impeccable character. His referees include longstanding friends, neighbours, colleagues, and his family.
2. The Offender was 49 at the time of the relevant offending. He is now 56 years of age.
3. He is highly qualified (holding, amongst many other qualifications, a Bachelor of Science, a Master of Sport Science, and a Master of Science in Clinical Biochemistry). He has worked extensively in pathology and sports coaching (including as a strength and conditioning coach). He has been significantly involved in many community sporting organisations.
4. As a consequence of media reporting about the allegations against him, The Offender lost his job as a teacher at the University of Sydney. Over 2020-2023, he worked as a labourer. He has had to rely upon Centrelink and his deceased wife's life insurance to make ends meet.
5. As I have said, several months after Bitconnect collapsed in 2018, the Offender's wife tragically took her own life. Since then, the Offender has been sole parent to his two daughters. Over the course of most of the six years he has endured the financial hardship, brought about by asset preservation orders procured firstly by ASIC on 11 December 2018 and then subsequently restraining orders procured by the Australian Federal Police under the Proceeds of Crime Act 2002 (Cth): see Commissioner of the Australian Federal Police v Bigatton [2020] NSWSC 245. The restraining orders were not based upon any allegation in respect of which The Offender has pleaded guilty.
6. Kala Ram has diagnosed The Offender as suffering from Adjustment Disorder and Major Depressive Disorder with Anxious Distress (Ram, paras 5.4-5.6). His referees (in particular, Mr Siafakas) speak to the considerable mental and emotional toll that these proceedings, and the loss of his wife, have had on him. The Offender has been experiencing mental health problems since at least February 2019.
7. Throughout all of this, the Offender has done a fine job bringing up his daughters.

Delay

1. The delay between initial investigation and trial has been such that the Offender has been kept in a state of uncertain suspense about his fate for nearly six years: R v Todd [1982] 2 NSWLR 517 at 519. The impacts of delay are recognised as constituting additional punishment of an offender: R v Katsoulis [2008] VSCA 278 at [13]-[14]; R v Cox [2013] QCA 10 at [101]. The uncertain suspense and its impact on the Offender is illustrated in the report of Ms Ram and the observations of his referees.
2. I have before me a chronology of the procedural history of the matter. It is true that there has been considerable delay between the commencement of the prosecution, the various scheduled hearings, and ultimately the plea of guilty by the Offender. I do not propose to get into each and every circumstance which, when added together, has made up that delay. Suffice to say that I am satisfied that the delay is neither the Offender's nor the Crown's fault. Rather, it is the consequence of the inevitable complexities involved in a criminal prosecution of this type of offence involving, as it did, the marshalling of enormous amounts of documentary material into a coherent and manageable form so as to be sensibly presented to a jury. In addition, as I have said, the Offender, as is his right, took a number of interlocutory points raising important and complex questions of law which needed to be resolved and which took time, as did the hundreds of pre-trial evidentiary rulings that I made in relation to documentary tenders.

Specific deterrence (s 16A(2)(j))

1. I am satisfied that the Offender will not reoffend. In light of that finding, the need for specific deterrence is greatly reduced.
2. Further, his mental conditions also moderate the need for specific deterrence: DPP v Verdins (2007) 16 VR 268 at [32(4)].
3. I also take into account that the Offender has been banned by ASIC from providing financial services until 31 August 2027. The existence of such an order, which keeps him well away from the financial services space for a considerable period of time, further militates against the need for specific deterrence.

General deterrence (s 16A(2)(ja))

1. I accept the Offender's mental conditions render him an inappropriate vehicle for general deterrence: DPP v Verdins (2007) 16 VR 268 at [32(3)]. His subjective experience of the past (approximately) 6 years is also relevant to this important question.
2. That being said, for reasons which I have tried to spell out in this judgment, general deterrence is a very important factor. I am satisfied however, that the very publication of these reasons, which both denounce the Offender's conduct and record the seismic impact that the offending has had on the Offender's and his family's life since ASIC began its investigations, combined with the various freezing orders in relation to his assets, the banning orders made and which remain in place, together all of which has received coverage in the media over a six year period, taken together will send a strong message to the general community, and in particular any rational people considering involvement in the promotion of any financial product, that the consequences of non-compliance with the law in this area will be significant and long lasting.

Rehabilitation (s 16A(2)(n))

1. I have already explained why I am satisfied that the Offender has good prospects of rehabilitation and that to the extent rehabilitation was necessary, it has occurred. I do not think he will re-offend.

Resolution

1. Accepting the objective seriousness of the conduct, the Offender has an extremely powerful subjective case. I am comfortably satisfied that whatever else he does in the future the Offender is not going to reoffend, and so questions of rehabilitation, reoffending, and protection of the community can be put largely to one side. I take into account the plea of guilty, albeit late, but in the context, I do not think that delay in plea is significant. The significant remorse and contrition shown by the Offender is a matter of weight. The anguish suffered by the Offender and his family as a result of what I think can appropriately be described as an ordeal he has been through since the collapse of BitConnect - of course this ordeal is not entirely due to this prosecution, it has been significantly impacted by the loss of his wife, nonetheless when I consider the very important question of general deterrence, denunciation, and appropriate punishment, I do not think it is irrelevant to take into account that no sensible person would wish to spend the best part of six years embroiled in a legal battle with prosecutors and ASIC. I have determined that a custodial sentence is not appropriate. Having looked at a selection of sentences for similar offending provided to me by the Crown and the Offender, I do not think the outcome I propose is inconsistent with previous decisions across Australia.
2. For all those reasons, I propose to deal with the matter, pursuant to s 20(1)(a), by imposing a conviction on a recognisance release order, without passing further sentence.

Orders 1. The Offender is convicted. 2. Order, pursuant to s 20(1)(a), the conditional release of the Offender upon the condition that he enter into a recognisance, self in the sum of $100 without security. 3. The condition of the recognisance is that he be of good behaviour for a period of 3 years commencing 12 July 2024 and expiring 11 July 2027.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 July 2024