Calvin Gabriel Gorsuch, 27, faced an online bail court hearing this week after his Woonona home was raided on Tuesday. Police allege the search uncovered more than 2,500 files depicting violent material involving young boys.
Mr Gorsuch, who owns Ohana Home in Thirroul, north of Wollongong, a store selling party items, homewares and toys, was charged with two counts of using a carriage service to make available child abuse material and one count of possession.
Commonwealth Director of Public Prosecutions solicitor Kate Gauld opposed the release application, telling the court the case against him was strong and that he allegedly made admissions to owning the accounts and to using Telegram to send and receive 25 images and videos.
"Police are aware he has several password-protected accounts, and they are yet to be reviewed by investigators," Ms Gauld said. "There is risk about whether that could be destroyed through access to the internet."
Ms Gauld argued the matters were "very, very serious" as they depicted violence against "very young children", with some videos more than five minutes long. The prosecution also argued that files stored on a cloud-based account would be difficult to supervise, as they could be accessed from any location with an internet-ready device.
In his bail application, defence lawyer Zali Kelly proposed conditions including no access to encrypted devices or the internet, agreement to rehabilitation, and supervision by authorities and family. She told the court her client had no prior criminal history, that it was his first time in custody, and that he had "very strong community ties".
"The frankness in which Mr Gorsuch spoke to police demonstrates a desire to rehabilitate, which is best done in the community," Ms Kelly said.
Local Court Judge Te'res Sia refused the application, describing the allegations as "extremely serious" and the threshold to a potential prison sentence "well and truly crossed". She said authorities would not be able to supervise Mr Gorsuch around the clock if he were granted bail.
Mr Gorsuch is yet to enter formal pleas. The matter returns to court on December 16.