Cryptocurrency worth €25,000 held by a man serving a prison sentence for drugs offences are the proceeds of crime, the High Court has ruled.

In a case that “broke new legal ground” relating to online currency, Ms Justice Carmel Stewart granted orders sought by the Criminal Assets Bureau (CAB) in respect of 2,000 units of a currency known as ether or ethereum, worth about €25,000 found in a crypto-currency ‘online wallet’ belonging to Neil Mannion.

Manion opposed CAB’s application on the grounds that his rights had been allegedly breached by an investigation into his holding of this cryptocurrency. Those arguments were dismissed by the judge.

Mannion is serving a six-and-a-half year prison sentence in Wheatfield Prison arising out of a search by gardaí at premises located on Dublin’s South Circular Rd in November 2014.

He admitted the premises was being used as a drug distribution centre for the sale of illegal drugs.

Mannion, aged 37, of Mount Drummond Avenue, Harold’s Cross, Dublin also admitted trading on the darknet sites known as the Silk Road and Agora under the alias the Hulkster.

In 2015, a judge at Dublin Circuit Court jailed Mannion after he and a co-accused admitted possession of LSD, amphetamine, and cannabis resin with intent to sell or supply at South Circular Rd on November 5, 2014.

CAB also brought proceedings against Mannion claiming that funds contained in various bank accounts, credits cards and in bitcoin, were the proceeds of crime.

Those proceedings were settled in February 2016.

CAB found the ether/ethereum currency in an online wallet after examining several computer devices seized during the search.

The ethereum did not form part of the first set of proceedings as at the time the action that particular cryptocurrency had not started operating as a trading currency.

Following a review of the case, CAB decided to bring a fresh application in July 2016 seeking to have ether, which had begun to be traded as a currency, deemed the proceeds of crime.

In a case that “broke new legal ground”, Ms Justice Stewart said Mannion’s constitutional and legal rights were not breached.

However, the arguments raised by Mannion were not without merit, and the judge said a great deal of the State’s investigation into the matter was potentially undermined by the intricacies of data privacy rights and cryptocurrency exchanges.

While the complications in the investigation did give rise to legitimate questions, they did not amount to a breach of his rights.

The judge said that such a breach could arise in a future case, and it would be prudent to prepare for such potential difficulties.