Canadian Dark Web Drug Peddler Fights with Court to Retain Half of His Bitcoin (BTC) Holding Rights

As per an all new article published by the Toronto Star earlier yesterday, a Canadian drug dealer (Matthew Phan) whose operations were recently unearthed by a local police agent on the deep-web is now fighting to retain possession of half his altcoin holdings (a figure that is estimated to be worth around 144 BTC).

The crypto coins were seized from Phan during a raid that took place last year, and if police estimations are to be believed, the stash is worth CAD $1.4 million,

As mentioned earlier, Phan is arguing that out of his total altcoin holdings of around 300 BTC, only half of the funds were used to facilitate illegal, drug-related activities.

A Detailed Look at the Case

According to local reports, Matthew Phan is a 30-year old university dropout who since being caught last December, has pleaded guilty to the following charges:

  • Illegally purchasing a firearm
  • Procuring a gun silencer
  • Being in possession of large quantities of banned street drugs

In addition to this, it is also worth mentioning that Matthew Phan was caught only after local police authorities were provided with a lead by the U.S. Department of Homeland Security. To be a bit more specific, the United States-based security agency had been tracking Phan’s activities on two dark-web sites where he had been making use of Bitcoin to facilitate his payments and monetary exchanges.

Not only that, this is the first case where a Canadian law enforcement body has seized a person’s BTC as well as orchestrated a dark-web trap to capture a well-known offender. As a result of this, the police has been able to launch an explicit attack against “off-radar technologies” that are not usually accounted for by state authorities.

Lastly, it should also be remembered that the aforementioned case has now set a precedent for how federal agencies across the western-world can potentially deal with such crypto-related issues.

More on the Matter

A police report in relation to the case states that a special unit was set up to keep a close tab on Phan— since they had gotten word that he was all-set to receive a Glock action-gun (via mail) that he had purchased on the dark web.

Additionally, officers had procured a warrant to search Matthew Phan’s condo/storage locker. When they finally went through his belongings, lead prosecutor Erin Pancer said that the investigation team found the following illegal items:

  • A few thousand grams of marijuana, cocaine, ketamine and MDMA.
  • Addressed envelopes that were being used to traffic illegal drugs.
  • A digital wallet containing a whopping 288 BTC.

In regards to the matter Dwayne King, a member of the investigation team that apprehended Phan, said that as soon as he found the crypto-wallet, he immediately seized it so that the holdings could not be liquidated.

King then went on to add:

“Not many years ago criminals kept their ill-gotten gains in shoeboxes hidden in their closets or under their mattresses. Cryptocurrencies have changed what that shoebox looks like and where it is hidden,”

Other Key Data Points Worth Bearing in Mind

  • It is quite interesting to note that in order to successfully complete this case, the Toronto police enlisted the services of a private firm whose name has not been disclosed at this time. If that wasn't enough, even the CEO of Ciphertrace Inc., David Jevans, was asked to appear in front of a jury to testify against Phan.
  • During the trial, it was revealed that Phan’s digital trail was clearly linked to a plethora of drug trafficking-related activities. To be more precise, a report outlined that many of his transactions had been carried out via illegal, dark-web websites such as Agora and Evolution.

On the subject of private-public partnerships helping in closing out such unique cases, King was quoted as saying:

“It forced agencies to start thinking about cryptocurrency investigations as a reality more than a possibility. A lot of agencies across the country were not ready to properly investigate cryptocurrency-related cases,”.

Final Take

In rounding off this case, it should be remembered that in his defence, Phan has claimed that all of his dark-web activities have primarily been related to “crypto-assisted gold trading”. However, the lead prosecutors for the case have brushed aside such claims and are saying that Phan’s altcoin holdings have been associated with a number of shady deals over the past 12 months.

And while the judge presiding over the case did grant that some of Phan’s BTC dealings were legitimate, there was also a mountain of damning evidence which suggested that the 30-year old had been using his Bitcoin holdings to purchase illegal firearms as well as peddle drugs across the globe.

A final ruling on the matter will now be doled out on the 4th of April.

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