Case involves CDN$1.4 million worth of bitcoin confiscated in first crypto seizure by Canadian police, demonstrating growing demand for cryptocurrency forensics and blockchain intelligence
SAN FRANCISCO–Blockchain security company CipherTrace released the details of the first Canadian court case to use a Bitcoin expert witness. The 2015 seizure marked the first-ever use of an expert witness during a bitcoin forfeiture hearing and the first seizure of cryptocurrencies—CDN$1.4 million worth – by Canadian police.
In this precedent setting case, CipherTrace CEO David Jevans testified in a February 2019 forfeiture hearing in the Ontario Superior Court of Justice, Canada. The case involved a defendant, Matthew Phan, who illegally purchased a handgun and trafficked drugs using Bitcoins on two dark web sites. In response, the Ontario Attorney General is seeking to confiscate 288 bitcoins, BTC.
Bitcoin has become one of the most popular forms of payment on dark markets because users don’t have to reveal their identities. With the surge in the use of bitcoin for illicit purposes, the demand for cryptocurrency forensics and blockchain threat intelligence to help trace and monitor transactions is rising just as quickly.
“I would have loved to have access to a tool such as CipherTrace when I originally conducted this investigation in May of 2015. The report prepared by Dave really was the pivotal piece in the Crown’s case for forfeiture,” Dwayne King, Senior Manager Grant Thornton Canada LLP. Dwayne was an Detective Constable in the Asset Forfeiture Unit and the lead proceeds of crime investigator when the bitcoin was seized in May of 2015.
Mr. Jevans travelled to Ontario and testified that he was able to trace multiple transactions from dark web markets Agora and Evolution into Phan’s bitcoin addresses. “If I knew nothing about the case, other than being presented with the bitcoin addresses that Mr. Phan controlled, my analysis would indicate that this individual was dealing in drugs online,” he wrote in a report filed in court.
The issue with the cryptocurrency originated in 2015 when police obtained a search warrant for the defendant’s condo and a storage locker. They seized $2.5 million worth of narcotics including thousands of grams of cocaine, fentanyl and MDMA and more along with evidence of narcotics trafficking, such as addressed envelopes, baggies and scales.
Officers also searched Phan’s computers and located a digital wallet containing 288 bitcoins, then worth about $88,000. At their peak value in 2017 the coins were worth more than $7 million.
The Ontario Crown Attorney argued that Phan’s bitcoins were proceeds of crime and Superior Court Justice Jane Kelly should approve a forfeiture order for the full amount—making it the first time for a Canadian court to confiscate crypto assets in a criminal case after a contested forfeiture hearing. However, Phan had argued against the forfeiture, claiming he should be allowed to keep half of the digital cash because it was not from nefarious purposes.
At the Crown Attorney’s request, Judge Kelly qualified Mr. Jevans to testify as an expert, making him the first-ever Bitcoin expert witness qualified by a Canadian court.
“As the crypto market expands, Canadian policymakers and law enforcement officials need to leverage external parties who specialize in blockchain forensic analysis if they intend to build resistance to illicit activity,” Dina Mainville, Sales Director, Canada. “Dave Jevans demonstrated that CipherTrace can bring transparency and accountability to illegal and fraudulent cryptocurrency transactions.”
Mr. Jevans, who has been called upon to help solve some of the world’s largest cryptocurrency crimes, also testified about dark web markets, how are they used, and how bitcoin transactions are traced.
CipherTrace develops cryptocurrency Anti-Money Laundering, cryptocurrency forensics, and blockchain threat intelligence solutions. Leading exchanges, banks, investigators, regulators and digital asset businesses use CipherTrace to trace transaction flows and comply with regulatory anti-money laundering requirements, fostering trust in the cryptocurrency economy. Its quarterly CipherTrace Cryptocurrency Anti-Money Laundering Report has become an authoritative industry data source. CipherTrace was founded in 2015 by experienced Silicon Valley entrepreneurs with deep expertise in cybersecurity, eCrime, payments, banking, encryption, and virtual currencies. The U.S. Department of Homeland Security (DHS) Science and Technology (S&T) and DARPA initially funded CipherTrace, and it is backed by leading Silicon Valley venture capital investors. Visit www.ciphertrace.com for more information or follow the company on Twitter: @CipherTrace and linkedin.com/company/ciphertrace/.
Kesselring Communications for CipherTrace
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.