Pierluigi Paganini February 12, 2020

Swiss authorities are investigating into allegations the company Crypto AG, a Switzerland-based maker of encryption devices, was a front company for the CIA and German intelligence.

According to a joint report published by Germany’s ZDF public broadcaster and The Washington Post the Swiss-based firm Crypto AG was operating for CIA and the German Intelligence agency providing them with access to encrypted communications of more than 120 countries for decades.

The investigation conducted by the media is based on documents from the CIA and Germany’s BND foreign intelligence agency.

The list of Crypto’s customers included Iran, India and Pakistan, military juntas in Latin America and the Vatican.

The company was completely under the control of the spy agencies since 1970. The documents explicitly refer some historical events when the agencies used the access grant by Crypto AG to monitor Iran’s mullahs during the 1979 hostage crisis, fed Britain intelligence about Argentina’s military during the Falklands War, and caught Libyan officials congratulating themselves on the 1986 bombing of Berlin’s La Belle nightclub, which was frequented by American servicemen.

According to intelligence experts, in the 1980s, a large portion of foreign communications processed by US intelligence officials (40%) had been accessed through Crypto’s systems.

Crypto was liquidated in 2018, but its products are still in use in more than a dozen countries.

“Swiss Defense Ministry spokeswoman, Carolina Bohren, told The Associated Press that “following research carried out by the media” her office had notified the Cabinet about the Crypto case on November 5, 2019. On Jan. 15, the decision was made to appoint a former supreme court judge to look into the reports and report back by the end of June.” reported the Associated Press.

“The events under discussion date back to 1945 and are difficult to reconstruct and interpret in the present-day context,”.

The involvement in the surveillance activity of the company was a profitable business that allowed Crypto AG to amass millions of dollars paid by the CIA and BND.

“Foreign governments were paying good money to the US and West Germany for the privilege of having their most secret communications read by at least two (and possibly as many as five or six) foreign countries,” wrote a report by the CIA into the operation.

Intelligence experts suspected the involvement of western spy agencies in Crypto since 1990s, for this reason, Russia and China never trusted the company’ machines and did not use them.

The AP News cited a case that took place in 1992, at the time a Crypto representative was arrested in Iran and spent months in prison before being released after the BND allegedly paid a $1 million dollar ransom.

Konstantin von Notz, a German lawyer and politician, member of the Alliance ’90/The Greens party, who sits on the parliamentary committee that oversees the BND, told ZDF that will ask more transparency on the case.

The BND used the proceeds generated from the sale of cryptography devices to fund field operations, while the CIA used the money to buy competitors and create the conditions for a monopoly for Crypto.

Erich Schmidt-Eenboom, a German intelligence expert who helped analyze the documents, told the APNews that it is not credible that the Swiss government wasn’t aware of Crypto’s activity of western intelligence.

“That’s not credible,” he said. “They shut both eyes.”

The Swiss government declared that it was informed of the case only in November 2019, then he decided to investigate into the case.

Swedish firm Crypto International that was formed after part of the original company was acquired by an investor in 2018, declared that it had “no connections to the CIA or the BND” and was very distressed by the reports.

Pierluigi Paganini

(SecurityAffairs – Crypto AG, intelligence)

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