A Toronto judge has ordered the forfeiture of $1.9 million in bitcoin after finding the cryptocurrency found on an online drug dealer’s computer is the proceeds of crime.

It’s believed to be Canada’s largest-ever forfeiture of bitcoin, an electronic currency that has fluctuated wildly in value in recent years.

Superior Court Justice Jane Kelly on Wednesday ordered that 281.41 bitcoins be forfeited to the Ministry of the Attorney General after hearing expert evidence earlier this year that Matthew Phan, 30, used them to buy a gun and illegal narcotics on the dark web.

Phan pleaded guilty in December to attempting to import a gun and possessing cocaine, PCP and ketamine for the purposes of trafficking.

At February’s forfeiture hearing, Crown attorney Erin Pancer argued that given clear evidence Phan used bitcoin to finance his illegal activities, the court should be satisfied the amount found on his computer is proceeds of crime.

Phan, who fought the forfeiture, argued not all of the bitcoins were used for nefarious purposes and that some were used to buy and sell gold. As well, he claimed he was selling the cryptocurrency itself on various exchanges.

Kelly said she had “no doubt” that for a while Phan was trading bitcoin. But overall, Kelly said she rejected the Mississauga resident’s evidence that there was a “legitimate explanation” for the large amount found.

“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 a large sales operation of illegal narcotics,” Kelly said Wednesday, summarizing her reasons.

“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” using the online marketplaces Evolution and Agora, which are used to buy and sell contraband, she said.

Kelly said she was satisfied the cryptocurrency is proceeds of crime and that she was, therefore, exercising her discretion to order them forfeited.

Phan, who has yet to be sentenced, isn’t completely out of pocket.

The judge said that although she is “suspicious,” she was not satisfied beyond a reasonable doubt that 7.23 bitcoins, valued at roughly $49,000 Wednesday, are proceeds of crime.

“Accordingly, 7.23 bitcoins will not be forfeited.”

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When police searched Phan’s computer in 2015, the 288 bitcoins in Phan’s wallet were worth about $88,000, jumping to a high of more than $7 million in late 2017.

Their value has risen more than $500,000 since the forfeiture hearing in February.

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