According to recent press reports, the CIA and the BND secretly acquired Swiss crypto machine manufacturer Crypto AG and sold backdoored encryption technology.

Yesterday the Washington Post and the German TV magazine Frontal 21 reported on what might become the crypto story of the year. I want to thank my readers Peter Krapp, Arnim von Schwedler, Jon Paul, Paul Reuvers, George Lasry, and George Keller for making me aware of it.


What has happened?

To explain what has happened, let me quote a press release published by my friend Paul Reuvers, co-operator of the Cryptomuseum website:

For many years it has been speculated that the cipher machines of Crypto AG (Hagelin) have exploitable weaknesses (backdoors) that can be used by Western intelligence services to break encrypted messages. From the Friedman Collection it was already known that a secret unwritten Gentleman’s Agreement existed between Hagelin and the American NSA from 1951 onwards.

But the actual story is almost unimaginable. Investigative journalists of the German TV station ZDF, and the American newspaper Washington Post, have discovered that in 1970, Crypto AG was secretly purchased by the German Bundesnachrichtendienst (BND) and the American Central Intelligence Agency (CIA) in a covert operation named RUBICON. For several decades, it enabled NSA – and its German counterpart ZfCh – to read virtually all diplomatic traffic of the countries that were on the CIA/NSA target list.


Who is Crypto AG?

The roots of Crypto AG go back to the 1910s, when Swedish engineer Arvid Damm started a crypto machine business. He was later joined by his country man Boris Hagelin, who was supported by his wealthy father.

After Damm’s death in 1927, Hagelin run the company alone. After a few difficult years with only little revenue, Hagelin’s company began to thrive in the mid-1930s, when the French army became its first major customer.

Source: Schreibmaschinenmuseum Pfäffikon

In the Second World War, Hagelin became a wealthy man, when he sold the license of a cipher machine named M-209 to the US Army and 140,000 specimen of this device were built.

Source: Cryptomuseum

In the 1950s, Hagelin relocated his business from Sweden to Switzerland, now naming it Crypto AG. During the early Cold War, Crypto AG was the world market leader for crypto machines, serving customers in over 100 countries all over the world. The German armed forces (Bundeswehr) used Hagelin’s designs, just like the military and diplomatic organisations in numerous countries in Europe Asia, South America and Africa.

When electronics and computers took the course in encryption technology, Crypto AG faced more and more competition from hardware and software producers. Nevertheless, they remained a major player in the crypto business.

In 2018, Crypto AG was liquidated and its assets sold to two several other companies.


Are these new disclosures surprising?

No. For decades there have been rumors and reports about Crypto AG including backdoors into their cipher machines. As Paul Reuvers writes, already in the 1950s the company produced encryption technology that was deliberately weakened. The CX-52, a very successful Cold War encryption device, was sold exclusively to allies of the USA, while other countries only received the less secure version, C-52. The two machine designs looked the same.

Source: Schmeh

In 1991, Crypto AG sales employee Hans Bühler was arrested and imprisoned for nine months in Iran. At this time, the Iranian government suspected backdoors in the machines they had purchased from Crypto AG, and Bühler was the only person representing this company they could get hold of. Here’s a recent article (in German) about this story.


What is worrisome about this affair?

It is far from unusual that a US intelligence authority employs in weakening crypto soltutions. What worries me is that in this case a German organisation was involved. Contrary to the USA, crypto backdoors, weak crypto standads and anti-crypto laws have no tradition in Germany. The German crypto industry has always profitted from this policy. So, the Rubicon affair is even more worrisome for German crypto vendors than for their US competitors.


Where can I learn more about this story?

The Washington Post has published a comprehensive article about the RUBICON affair, including a photograph of Paul Reuvers and Marc Simons.

Swiss TV station SRF has produced a one-hour feature on the subject. Dutch radio program Argos will reveal some of the Dutch aspects of Operation RUBICON next Saturday (February 15th) at 14:00 (CET).

Further reading: A fascinating report of Enigma’s contemporary witness, Max Rüegger


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Kommentare (10)

  1. #1 Michael BGNC
    Lake Constance
    13. Februar 2020

    It’s not a scandal, it’s SIGINT. Everyone should know that. Whats next: The NIST certified elliptic curves provided by the NSA …

  2. #2 Joe
    13. Februar 2020

    Im Westen nichts neues.

    In der BW seit 1964 als Hell-54 genutztes CX-54
    T DV 5810/001-13

  3. #3 Thomas
    13. Februar 2020

    This story is already known since 1996:, at the best some details may be new.

  4. #4 Norbert Köhler
    13. Februar 2020

    From now on it is difficult for me to trust my zero-knowledge cloud provider in Switzerland

  5. #5 Thomas
    13. Februar 2020

    The newsmagazin article from 1996 in English:

  6. #6 Thomas
    13. Februar 2020

    “Investigative journalists of the German TV station ZDF, and the American newspaper Washington Post, have discovered that in 1970, Crypto AG was secretly purchased by the German Bundesnachrichtendienst (BND) and the American Central Intelligence Agency (CIA)”. They might have found new evidence, but the fact as such had been previously disclosed: In his book “Verschlüsselt. Der Fall Hans Bühler” from 1994 ( Swiss journalist Res Strehle meticuously described how Crypto AG was influenced by the West German secret service who held the shares with a trustee in Liechtenstein and was supported by Siemens.

  7. #7 Richard SantaColoma
    13. Februar 2020

    This reminds me of the situation with the “Clipper Chip” in the 1990’s. But in that case, the proposal to install and use these chips, with the backdoor, was not hidden from the public… but projected as a valuable security asset for the NSA.

    “The Clinton Administration argued that the Clipper chip was essential for law enforcement to keep up with the constantly progressing technology in the United States. While many believed that the device would act as an additional way for terrorists to receive information, the Clinton Administration said it would actually increase national security. They argued that because “terrorists would have to use it to communicate with outsiders — banks, suppliers, and contacts — the Government could listen in on those calls.”

    Personally, when I heard the argument, by the Clinton administration, to include this chip in privately owned devices, it caused me to re-think my support of that administration: I used it as a major reason that I chose to vote for the opposing party, and did. At the time, also, I noted that anyone I told about the Clipper Chip had no idea that such a thing WAS proposed, and were usually shocked at the invasion of privacy it suggested: It is not mentioned in the article, but in addition to cell phones, the chip was being proposed for inclusion in land line phones, fax machines and home PC’s.

    But surprise, surprise (not really): From your post, we see that the NSA was busily including such back doors all over the place, anyway. And I will not be further surprised to learn this is not the end of it. As they say, “Just because you are paranoid, doesn’t mean somebody isn’t really after you”.

  8. #8 Klaus Schmeh
    15. Februar 2020

    Friedrich Hartmann via Twitter:
    So more likely the Weltzeituhr over the Berlin-Clock with it’s compass rose and some rotational or geographic encoding then? Would also be in the spirit of ’89, when Kryptos was conceived.

  9. #9 Detlev Vreisleben
    16. Februar 2020

    Here you can see the Swiss film about the Crypto AG:
    The European Parliament published an Echelon paper in 2001 showing the influence of the NSA to the Crypto AG.