AMSTERDAM (Reuters) - Dutch police on Friday said they have arrested the owner of a company that provided encrypted communications for a network of 19,000 customers and shut its operations down, saying they believed it was being used for organized crime.
The owner of the company, Ennetcom, is suspected of money laundering and illegal weapons possession, prosecutors said.
"Police and prosecutors believe that they have captured the largest encrypted network used by organized crime in the Netherlands," prosecutors said in a statement.
Although using encrypted communications is legal, many of the network's users are believed to have been engaged in "serious criminal activity," said spokesman Wim de Bruin of the national prosecutor's office.
While Ennetcom and most of its users are in the Netherlands, the bulk of the company's servers were in Canada. Prosecutors said information on the servers in Canada has been copied in cooperation with Toronto police.
De Bruin said the information gathered would be used in the investigation against the company's owner, and also potentially in other ongoing criminal investigations.
He declined comment on whether and how police would be able to decrypt information kept on the servers.
On Friday Rotterdam judges ordered the company's owner, 36-year-old Danny Manupassa, held for 14 days while the investigation continues.
"The company sold modified telephones for about 1,500 euros each and used its own servers for the encrypted data traffic", the statement said.
"The phones had been modified so that they could not be used to make calls or use the Internet."
The phones had turned up repeatedly in investigations into drug cases, criminal motorcycle gangs, and gangland killings, prosecutors said.
A statement published on Ennetcom's website said that it had been forced to "suspend all operations and services for the time being."
"Ennetcom regrets this course of events and insinuations towards Ennetcom. It should be clear that Ennetcom stands for freedom of privacy," the statement said.
All 19,000 of the network's users, not all of whom are in the Netherlands, were sent a message on Tuesday notifying them that the system was being investigated by police.
(Reporting by Toby Sterling; Editing by Dominic Evans)