Crypto AG, the masterpiece of the CIA and German secret services

Crypto AG, the masterpiece of the CIA and German secret services

From the 1950s to 2018 Crypto AG provided the technology for encrypt conversations to governments around the world. In the immediate post-war period, the company, making strength of its Swiss nationality, managed to position itself as a reliable supplier in a world still split in factions.
Soon Crypto AG built a solid reputation, reaching 120 governments with its products, too bad that its purpose was not only profit, but also the collection of information, for a spy story worthy of the best James Bond movie.

Make money by stealing information from enemies and allies

The technology to encrypt Cypto AG's conversations was used by secret services and officials from countries such as Iran and Libya. They were used by the Vatican secretariat, but also by the main NATO powers, including Italy. What nobody knew was that the Crypto AG was actually secretly controlled by the CIA and BND, the secret services of West Germany. For years 120 governments have used tools to encrypt communications specifically created to be easily circumvented by America, which has used this privileged position to its advantage in some of the most critical moments in its history.
If this story emerged it was due to the Washington Post, which had access to a 96-page CIA dossier on the history of theRubicone operation, as it has been nicknamed by the Americans. A story that should have been partially declassified, but things went differently.
The ties between the American government and the company have roots in the Second World War, when the future founder of Crypto AG, Boris Hagelin, escaped to the United States in 1940. Hagelin was of Russian origin, but had been living in Sweden for years to escape to the Soviets. He had to escape once again when the Nazis entered Scandinavia.

Hagelin was already an inventor at the time and had managed to create an extremely portable communications encryption machine, the C-209. He soon became an ordinance in every regiment of the American Army. Not the best that could be done, especially considering that the Axis had been using the Enigma system for some time.
Yet it did its duty: although communications could be deciphered in a few hours, the C-209 it was used only for flash communications in the field, making it useless to even attempt to decipher the message.

After the war, reports the Washington Post, Hagelin returns to Europe with a small fortune accumulated thanks to his service to the United States of America.
Founded the Crypto AG, shortly afterwards it realizes an extremely more robust cipher machine than the C-209. This is where the interest of the Americans for the company was born, initially seen as a possible threat.
The USA, taking advantage of Hagelin's friendship with the father of cryptography William Friedman, then managed to convince Crypto AG to sell its machines exclusively to the Allied States, cutting the bridges with hostile governments. As we know now, the agreement soon took another turn.

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In 1960, the CIA began to fill Hagelin's company with money, but this time the prayer was to start selling encryption technology to all governments, including those who had not joined the Atlantic pact. The Germans also joined the game shortly thereafter, and Crypto AG's customer list grew year by year. Thus was born what the CIA, certainly not sinning with modesty, describes as "the espionage operation of the century». "Governments paid good money to the United States and West Germany to get their most secret conversations read by at least two foreign countries»Reads the CIA dossier. According to the Washington Post, as early as 1970 the CIA and NSA directly controlled every aspect of Crypto AG, which has now become a full-fledged puppet company.The takeover of the National Security AgencyThe decisive step comes when Crypto AG, in order to face technological progress, is forced to insert electronic components inside its machines. The company is forced to rely on the NSA to build the circuits.
The agency designs them in such a way that the transmitted message is apparently a communication of letters and numbers in random order, actually containing within it a repetition useful for identifying the ciphering pattern quickly. In the absence of a real backdoor, the NSA was still forced to manually intercept any communication. Only the deciphering phase was facilitated. The first electronic machine from Crypto AG is the 1967 H-460.

The only missing piece is that neither China nor Russia were ever customers of Crypto AG, effectively making Operation Rubicone imperfect. "They both smelled something»Writes the newspaper. However, there was no lack of scenarios where the ability to spy on the conversations of opponents was crucial for the Americans. The Washington Post reports that as all these governments used the technology of the Swiss company, the US managed to spy on Iranian officers in the midst of the hostage crisis, the Argentines during the Falklands war (for the benefit of Thatcher's friendly government) , and the Libyans shortly after the 1986 Berlin massacre.
At least until the 80s, 40% of confidential communications were encrypted using proprietary technologies from Crypto AG. Which is another way to write "i40% of confidential communications were actually not confidential at all". At least for Americans and Germans.
The element that is worth emphasizing once again is that all this happened while Crypto AG billed tens of millions of dollars each year which were then divided equally between the CIA and the German secret services. The Washington Post reports that the Germans at some point would even begin to consider Crypto AG as an important source of funding for their secret operations, to the point that the CIA had to intervene often to remind them that Operation Rubicone was a espionage initiative and not a money-making machine.

All the Crypto AG products, the Washington Post points out, were also made in a safe version without the exploit. This was used by Americans and allied governments. However, it is certain that America used its position within the company to spy on friendly countries, such as Italy, Greece, Spain and Turkey. Italy in 1981 was on the company's most important customer list controlled by the CIA, in the company of Saudi Arabia, Iran, Indonesia, Iraq, Libya, Jordan and South Korea.
The Americans' decision to deceive friendly governments also led Germany to withdraw from the agreement, for fear that relations with the allies could be compromised if the deal became public. Germany sold its shares of Crypto AG in 1998, while the CIA would continue to control the company until 2018, when it was sold to two other companies.

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But did the Swiss know?

The CIA and BND wanted to conduct their operations in such a way that the company's employees did their part without suspicion of any kind. Precisely for this reason, it is difficult to reconstruct the responsibilities of the parties involved.
"We at Crypto International have never had any agreements with the CIA or BND, if what you are telling me is true, then I feel betrayed, my family feels betrayed, and I imagine there will be many employees and many customers who they will feel betrayed in turn".

There were also those who sensed that there could be something wrong, such as Mengia Caflisch, a former employee of Crypto AG who revealed to the Washington Post that she had always considered the company's algorithms very suspicious. Caflish would have attempted to insert an algorithm of her own invention into the machines which would have risked making communications virtually indecipherable. It was discovered and the algorithm was replaced with the original version.

In recent days, the Swiss government has opened an investigation to verify the role of the American and German agencies and a possible connivance between the Swiss officials and the Rubicone operation. In addition, Crypto International, the company that currently owns the brand and part of the assets of the original company, has had its license revoked to export its products.
The Washington Post claims that it is absolutely clear from CIA documents that officials have known for decades about the existence of the Rubicone operation.
"What saddens me is that you think you've done a good job, you've created something safe, and then you realize you've dedicated your entire working life to defrauding your customers"said Juerg Spoerdnli, an electronic engineer who worked for Crypto AG for 16 years.

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Currently Crypto AG products are still used by at least a dozen countries around the world, although Crypto AG was liquidated two years ago, and all its assets taken over by CyOne Security and Crypto International. Both companies claim there has never been a link between them and the CIA.


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