A Canadian court has qualified the nation’s inaugural Bitcoin expert witness, blockchain analysis firm CipherTrace has revealed.
The episode marks the first time a court in the country has formally requested the help of a cryptoeconomy expert for a prosecution and highlights anew how the legal specter of cryptocurrencies have risen in major jurisdictions around the globe.
The qualified witness was CipherTrace chief executive officer Dave Jevans, who was enlisted by Judge Jane Kelly of the Ontario Superior Court of Justice to help analyze the cryptocurrency transactions of defendant Matthew Phan. Phan was arrested in 2015 on charges of dealing drugs and illegally purchasing a firearm via two dark web marketplaces.
Judge Kelly leveraged Jevans’s expertise in an asset forfeiture hearing held this month to decide the fate of 288 bitcoin the Ontario Crown Attorney Asset Forfeiture Unit had seized from Phan four years ago, CipherTrace revealed on March 6th.
A Drug Trafficking Enterprise
At the time of Phan’s arrest, those bitcoin were worth over $80,000 USD. Today, they’re worth over $1 million. The stakes of the forfeiture were even higher during the 2017 bull run, when the seized bitcoin reached an approximate valuation of $7 million.
Jevans was tasked with scrutinizing relevant BTC transactions. The CEO ultimately discerned that Phan had conducted considerable business through two then-popular dark web markets, Evolution and Agora.
“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,”
Phan had apparently used the markets to facilitate a sprawling drug trafficking enterprise. Investigators who executed a search warrant on his residence uncovered millions of dollars’ worth of MDMA, cocaine, and fentanyl.
The case also highlights how bitcoin use is currently pseudonymous at best and that blockchain investigation companies pulling back that pseudonymity are a surging service in the ever-maturing cryptoverse.
“I would have loved to have access to a tool such as CipherTrace when I originally conducted this investigation in May of 2015,” said Dwayne King, a former detective with the Crown’s Asset Forfeiture Unit. “The report prepared by Dave really was the pivotal piece in the Crown’s case for forfeiture.”
Not the First Time CipherTrace in Recent News
CipherTrace has made headlines a few times this year.
Most recently, the company’s leadership responded to the fallout surrounding Coinbase’s recent acquisition of Neutrino, a blockchain analysis company that had staff ties to controversial software firm Hacking Team. Coinbase later said it was firing the associated employees but caused a separate scandal in saying it bought Neutrino to clamp down on undisclosed blockchain analytics vendors selling Coinbase users’ data.
In the wake of that revelation, CipherTrace CEO Dave Jevans told BREAKERMAG that his company wasn’t one of those offending vendors.
“I’ve definitely met with Coinbase numerous times,” he said. “I can tell you we were definitely not a vendor that was used to sell data to other people. They’ve used a number of different vendors.”
But it hasn’t all been damage control. In brighter news, CipherTrace raised $15 million in an investment round last month that brought in investors like Mike Novogratz’s so-called “crypto bank” Galaxy Digital.
“Our investors have decades of experience investing in proven teams and technology companies in the Internet security and financial technology industries,” Jevans said at the time. “CipherTrace will join the ranks of these successful companies.”
The fundraising comes after leading blockchain analysis firm Chainalysis had raised $30 million in a Series B just a few days prior. The two companies’ rounds, along with Coinbase’s acquisition of Neutrino, suggests that blockchain investigation plays are both in vogue and here to stay.