Matthew Phan of Ontario used bitcoin to purchase a handgun, cocaine, PCP and ketamine. The 30-year-old, who pleaded guilty to importing the firearm and drugs in December, tried to convince the courts that the 281 bitcoin he owned – currently worth a staggering £1,084,000 – had been amassed through honest dealings as a trader, and that the crypto was used for buying and selling gold. He claimed he was entitled to keep at least half of the fortune. However, Crown Attorney Erin Pancer argued there was little to support that, and the evidence pointed to Phan using BTC to bankroll his criminal activities.

She instructed the court she was satisfied that almost all the bitcoin held by Phan was the proceeds of crime.

He was told he would be allowed to keep seven of the bitcoins, as there was evidence to suggest they had been acquired legally.

At a forfeiture hearing, Jane Kelly – Justice at Toronto Superior Court – ordered that Phan’s digital wallet containing the cryptocurrency be seized and handed to the Ministry of the Attorney General.

Justice Kelly said: “There is overwhelming evidence to suggest that Mr Phan was using the dark markets to purchase illegal items such as firearms and silencers.

“It is clear from the evidence found during searches, particularly of his condominium unit, that he was conducting large sales of illegal narcotics.

“It is a reasonable inference to draw that payment for such illegal narcotics sales was made using bitcoin that was found in the digital wallet on Mr Phan’s computer.”.

Phan, the court was told, had been using the dark web and online tools such as Evolution and Agora to buy and sell contraband.

Although yet to be sentenced, Phan was informed he would be entitled to keep 7.23BTC – around £27,000.

The forfeiture is the first cryptocurrency seizure by police in Canada, and one of the largest crypto seizures in the world.

At the time of his arrest, 288 bitcoin would have been worth almost two million pounds.

In December 2017, during bitcoin’s all-time high, the crypto in Phan’s digital wallet would have been worth £5.7 million.

• Coin Rivet is a website bringing news, information, analysis, opinion and insight from the fast-moving blockchain world.

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