Crypto A.G. is a long-established manufacturer of
and communications equipment, based in Steinhausen (Switzerland),
with offices in many countries and a world-wide customer base.
The company was established in 1952 by Russian-born Swede
who gradually moved the activities of his Swedish company
AB Cryptoteknik to Switzerland after restrictive laws were proposed
in Sweden. As a tribute to its founder, the company
logo still bears his name.
With Switzerland being a neutral country, Crypto AG can do business througout
the entire world, with virtually no limitations. In the past, this has often
led to allegations
that the devices sold by Crypto AG were flawed in order
to give certain secret services the ability to intercept and decode the
messages that are created with them. This is strongly denied by the company
however. It is unknown who the owners of the company are, supposedly even
to the current management .
➤ Hagelin cipher machines
The history of Crypto AG starts around 1922, when Russian-born Swede
Boris Hagelin was asked by the Swedish Nobel family to become a financial
controller at Arvid Gerhard Damm's company AB Cryptograph in Stockholm.
The Nobel family had put a significant sum of money into Damm's business and
wanted the son of a a friend, Boris Hagelin, to look after their
By 1925, Hagelin had become the acting director of the company, whilst
AG Damm was persuing business in France.
In the meantime, Hagelin had developed
a cipher machine that was based on Damm's erlier design of the
B-18. Hagelin improved the design by adding his (now) famous pin-wheels,
after which the machine was offered to the Swedish Army, who adopted it.
After AG Damm died in 1927, AB Cryptograph was liquidated in 1932 and
replaced by AB Cryptoteknik, Hagelin's first own company. In 1935, he
developed the C-35
at the request of the French Army, the first of the C-machines.
The C-35 was followed by the
C-37 and eventually
the machine that changed Hagelin's life. In May 1940, several months after
the outbreak of WWII and after extensive testing, it was selected as a
tactical cipher machine for the US Army. The new machine became known as
and was built at the Corona plant of the LC Smith typewriter
company, with an output of 500 units a day. By the end of the war,
over 140,000 units had been built in America, and Hagelin had earned his
first real fortune.
After the war, when Sweden was about to introduce some restrictive laws,
Hagelin decided to move to neutral Switzerland, where he settled down in
Zug under the name Crypto AG.
After a short period of cooperation with
Dr. Edgar Gretener on
online cipher machines, he decided to go his own way and developed
the TC-52. Over the course
of the following years, the business was gradually moved from Stockholm
(Sweden) to Zug (Switzerland), where it is still located today.
➤ Read Hagelin's personal biography (English)
➤ Original manuscript of the biography (German)
Over the years, Crypto AG has regularly been accused of selling
flawed equipment or, in more popular terminology: equipment with a
backdoor that gives certain secret services the ability to break
the messages that are encrypted on those devices. With Crypto AG
being based in neutral Switzerland, they sell their equipment to
most countries in the world with virtually no restrictions.
It has often been suggested that the company cooperates with secret
services like the German
and the American
National Security Agency (NSA)
in order to give
these agencies access to the high-level diplomatic and military
traffic of certain countries. Below are some examples of such
allegations. It is important to note however, that Crypto AG
strongly denies these allegations and that until 2014,
no conclusive evidence has ever been submitted.
Documents released by the NSA in June 2014  however, confirm
that the NSA had come to a
secret agreement with Boris Hagelin, the
founder and initial owner of the company, as early as 1951.
Although the exact details of this agreement are still classified,
there is strong evidence
to suggest Hagelin's full cooperation
with the NSA at the time, in return for certain priviledges.
➤ More about the secret NSA/Hagelin Agreement
In 1992, Crypto AG's top sales representative
was arrested in Iran on the suspicion that the Hagelin cipher machines
used by the Iranian Government were flawed, or in popular terminology:
that they contained a backdoor.
A loose remark of US President Ronald Reagan about evidence against Libya
had led them to believe that Crypto AG was cooperating with the US.
Bühler – completely unaware of any manipulation with the machines –
is interrogated three times a day for nine months and is finally released
in 1993, after the bail of US$ 1,000,000 is payed by Crypto AG.
This incident certainly doesn't mark
the finest period in Crypto AG's history.
Immediately after Bühler's release from prison and his subsequent
return to Switzerland, he is fired and, in addition to that,
the company also wants him to repay the US$ 1,000,000.
Bühler then decides to go public and confines his story to a book
that is published in 1994 .
The Swiss Federal Police – the Bundesanwaltschaft – has investigated the
matter and questioned several people, and it is said that no irrefutable
evidence against Crypto AG was ever found. The outcome of the investigation
however, remains classified to this day and repeated requests from
journalists for public disclosure of the results of the investigation
have so far been denied.
Since Hans Bühler went public, some of his former colleagues have decided
to come out as well. Former software engineer Jürg Spörndli
confirmed that the company was visited frequently by NSA specialists and that
on several occasions he was instructed by his manager to swap a
cryptographic algorithm that he had developed, for an alternative one
– supplied by the NSA – that was clearly weaker .
This case shows some similarity with the weakening of the
In 2014, the NSA
released more than 7600 documents , amounting to over
52,000 pages of historical material relating to the career of
William F. Friedman
(1891-1969), who is considered the dean of American
Cryptology. Although some documents have been fully declassified,
most of them are still heavily redacted as – according to the NSA –
they may contain information that could harm national security
or any individuals or companies mentioned in those documents.
It is no secret that, on a personal level,
Hagelin and Friedman were good
friends. They shared an interest in historical cipher machines and they
both suffered from depressions.
During WWII they were in close contact after Hagelin
'escaped' to the US in March 1940 and subsequently allowed the
Americans to build his
M-209 cipher machine
under licence. Once the war was over, they maintained their
friendly relationship and helped each other on a number of occasions.
Among the released documents are hundreds of letters between
Friedman and Hagelin. Most of these letters are of a personal nature,
but some of them contain explicit NSA material. In records,
dated 12 April 1951, that were taken from Friedman's home,
AFSA — the predecessor of the NSA —
refers to: AFSA negotiation via C/A with Mr. Hagelin
of AB Cryptotechnik.
In a memorandum of 5 February 1954, the NSA expresses its concerns
about newly announced Hagelin cipher machines, such as the
and the T-52,
and asks Friedman to investigate this.
Friedman is allowed to make a proposal to Hagelin on behalf of the
director of the NSA (DIRNSA).
It is further agreed that Friedman will use his personal stationary
and his private address for further correspondence with Hagelin,
in order not to ring any bells. As a result, Hagelin and DIRNSA
enter into what they call a Gentleman's Understanding
for a period of 6 months,
during which time the details of what is officially known as
the Hagelin Negotiations will be finialised.
Although the exact details of the negotiations with Hagelin have
not yet been declassified, it must have been a serious deal,
as it took the NSA twelve months, rather than the anticipated six,
to come up with a proposal. Finally, in February 1955, Friedman
travels to Zug (Switzerland) for a 'personal' visit to Boris
Hagelin, with the intention to present proposal USCIB 29.14/29 to him.
On 21 February 1955, Friedman arrived in Zug (Switzerland) and
stayed at Hagelin's home for a full week, during which time they
discussed cryptographic and business matters. At Friedman's request,
and without hesitation, Hagelin released full details of the machines
he has sold so far, and to which countries he sold them. On the last
day of his visit, Friedman put proposal USCIB 29.14/29 before
Hagelin and, although Friedman clearly indicated that he could
take some time to think it over, to Friedman's surprise
Hagelin immediately agreed with the full proposal.
➤ Read the full story of the NSA/Hagelin deal
Although, at present, the exact details of the deal between the
NSA and Hagelin are still classified, the following can be
concluded from the released documents:
- Negotiations between the NSA and Hagelin started as early as 1951.
- There was a certain amount of money involved in the deal (US$ 700,000).
- Hagelin would provide certain information to the NSA.
- From 28 February 1955 onwards, there was a deal between the NSA and Hagelin.
- The NSA would write the brochures and instructions for the CX-52 machine.
- Hagelin got some personal favours for some of his relatives in the US.
- Hagelin would refrain from doing something. 1
- Hagelin did not want to be payed for the above (not doing something).
- Hagelin was allowed to buy back several hundreds of M-209 machines.
- The NSA would write the manual for 'proper use' for NATO. 2
In this context it is assumed that Hagelin agreed not to sell
certain versions of his machines to certain countries. As a result,
these countries would use weaker machines which were
easier for the NSA to break.
In order to make best use of their machines, Hagelin usually
released a manual for 'proper usage'. For the machines
used by NATO, it was agreed that the NSA would write this manual.
This could imply that Hagelin received NATO orders as part of the
deal with the NSA, but this can not be confirmed at present.
With respect to the above, it is certain that an
between the NSA
(formerly: AFSA) and
Mr. Boris Hagelin
as early as 1951.
This agreement was reviewed several times in the following years,
in any case in 1955 and 1957, and did not have a termination date.
The above story is the result of extensive research in the Friedman
Collection of Official Papers by the British Broadcasting Corporation
(BBC) and Crypto Museum.
It was the subject of a radio program that was aired
on 28 July 2015 on BBC 4 .
In an official reply to the BBC, Crypto AG neither denied nor confirmed the
results of the investigation and the contents of the Friedman Papers,
but firmly confirmed that, whatever had happened in the past, this is
definitely not happening today.
The company further ensures that mechanisms have been
put in place to prevent such situations from happening in the future.
➤ Read the full story
- US 2,089,603 - Ciphering machine (C-35)
Boris Hagelin. Filed 23 August 1935.
About → C-35 machine.
- US 2,247,170 - Ciphering machine (BC-38)
Boris Hagelin. Filed 28 November 1938.
About → BC-38 machine.
- US 2.394,765 - Ciphering and deciphering mechanism
Boris Hagelin. Filed 24 July 1939.
- US 2,765,364 - Keying mechanism (CX-52)
Boris Hagelin. Filed 5 October 1940 as → US 188,546 1
Placed under Secrecy Order on 14 September 1951 at request of AFSA (NSA).
Released on or after 27 March 1952. Published 2 October 1956.
- US 2,802,047 - Electric switching device for ciphering aparatus
Boris Hagelin. Filed 16 October 1953. Published 6 August 1957.
This patent actually interferes with a secret US patent for the same,
filed around 1940, but Hagelin was not informed about this in 1953.
The principle of re-entry descriped in this patent was also used
in the American KL-7 (then: AFSAM-7)
and later in the Russian Fialka.
Declassified by NSA on 17 June 2014 (EO 13526).
- Boris Hagelin, Die Geschichte der Hagelin-Cryptos
Original manuscript by Boris Hagelin in German language. Zug, Fall 1979.
- Boris Hagelin, The Story of Hagelin Cryptos
English translation of the above. BCW Hagelin, Zug, Spring 1981.
Later edited by David Kahn and published in Cryptologia, Volume 18, Issue 3, July 1994, pp 204-242.
- Hans Stadlin, 100 Jahre Boris Hagelin 1982-1992 (German)
Crypto AG. Crypto Hauszeitung Nr. 11. Jubilieumausgabe September 1992.
- Wikipedia, Crypto AG
Retrieved July 2015.
- NSA, William F. Friedman Collection of Official Papers
Retrieved July 2015.
- Bruce Schneier, NSA backdoors in Crypto AG Cipher Machines
11 January 2008. Retrieved July 2015.
- Bruce Schneier, Crypto-Gram, June 15, 2004 - Breaking Iranian Codes
15 June 2004. Retrieved July 2015.
- BBC Radio 4, Document - The Crypto Agreement
Evidence of a secret deal between Crypto AG (Hagelin) and the NSA.
28 July 2015, broadcast, presented by Gordon Corera.
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© Crypto Museum. Created: Friday 17 July 2015. Last changed: Monday, 08 January 2018 - 08:53 CET.