Yes, evil is not outside God's sovereignty. But I wouldn't say God "created" evil? I don't think that's the correct way to put it.

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"Evil is designed by God."

-John MacArthur

"God didn't just permit evil, He ordained it."

-RC Sproul

Ordained is probably the best way to capture that God knew evil/sin would come into existence, and yet He allowed for it for Greater purposes.

Yes, "ordained". I think this is the way to put it as well.