Dutch police say they have arrested the owner of Ennetcom, a provider of encrypted communications for a network of 19,000 customers, on suspicion of using the business for organised crime and shut it down.
Rotterdam judges ordered that Danny Manupassa, 36, be held for 14 days during an ongoing investigation.
Prosecutors said he is suspected of money laundering and illegal weapons possession.
"Police and prosecutors believe that they have captured the largest encrypted network used by organised 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.
Ennetcom said in a statement on its website that the company 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 company said.
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 co-operation with Toronto police.
De Bruin said the information gathered would be used in the investigation against Manupassa, and potentially in other ongoing criminal investigations.
De Bruin declined to comment on whether and how police would be able to decrypt information kept on the servers.
"The company sold modified telephones for about 1500 euros each and used its own servers for the encrypted data traffic," the prosecutors 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.
All 19,000 of the network's users were sent a message on Tuesday notifying them that the system was being investigated by police.
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