|
|
|
|
|
|
|
Crypto NSA CIA BND Crypto International AG → CyOne →
Hagelin-Cryptos · 1950-2019
Crypto AG was a manufacturer of
cryptographic
and communications equipment, based in Steinhausen (Switzerland),
with a world-wide customer base and offices in several countries.
It was established in 1952 1 by Russian-born Swede
Boris Hagelin,
who gradually moved the activities of his Swedish company
AB Cryptoteknik
to Switzerland after restrictive laws had been proposed
in Sweden. As a tribute to its founder, the company logo
was based on his name. Crypto AG
was liquidated on 31 October 2019 after its activities had been taken over
by Crypto International AG.
➤ Crypto AG (Hagelin) cipher machines
As Switzerland is a neutral country, Crypto AG could do business througout
the entire world, with virtually no restrictions.
The company's ownership has always been a mystery,
supposedly even to the management [1].
In the past, the company has often been
accused of providing
backdoors
to make their devices readable for foreign
intelligence agencies.
Crypto AG has always denied this.
It has meanwhile become clear that from 1951 to 1960 a
Gentleman's Agreement (GA)
existed between Boris Hagelin
and the US
National Security Agency (NSA),
and that from 1960 to 1970, Crypto AG had a
licencing agreement
with the American
Central Intelligence Agency (CIA)
[12].
But the most striking discovery was that, in 1970,
Crypto AG had secretly been purchased by the German BND
and the American CIA, in a project known
as Operation THESAURUS
— later renamed RUBICON.
In 1994, the CIA became the sole owner, and in 2019 the company was
dissolved, after the product range and some personnel
had been taken over by
Crypto International AG
[12].
On 3 July 2020, following actions by the Swiss Government,
Crypto Internal fired its entire staff [15].
➤ More about Operation RUBICON
|
 |
-
More precisely: the company was founded in 1950, but did not become
operational until 1952.
|
|
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 AB Cryptograph in Stockholm —
a company involving Arvid Gerhard Damm.
The Nobel family had put a significant sum of money into the business and
wanted the son of a friend, Boris Hagelin,
to look after their investment.
|
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
the B-21,
a cipher machine that was based on Damm's erlier design of the
B-18. He improved the design by adding his (now) famous pin-wheels,
and offered it to the Swedish Army.
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-36 —
the machine that would change his life. At the outbreak of WWII,
he took the machine to the US, where an improved version became known as
the M-209.
By the end of the war,
over 140,000 units had been built in America, and
Hagelin was a millionaire.
After the war, when Sweden was about to introduce several restrictive laws,
Hagelin decided to move to neutral Switzerland, where he settled down in
Zug under the name Crypto AG.
After a brief cooperation with
Dr. Edgar Gretener involving
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 remained until 2021. 1
➤ More about Boris Hagelin
➤ Read Hagelin's personal biography (English)
➤ Original manuscript of the biography (German)
|
|
-
In 1966, the company moved to nearby Steinhausen. In 2019, Crypto AG
was liquidated after its portfolio and personnel had been taken over in 2018
by Crypto International AG.
|
Over the years, Crypto AG has regularly been accused of selling
rigged equipment or, in more popular terminology: equipment with a
backdoor,
which makes some of the devices readable for
certain Intelligence agencies (such as the NSA). As Crypto AG
was based in (neutral) Switzerland, they were able to supply equipment
to most countries in the world with virtually no restrictions.
Despite Hagelin's worldwide success and the lack of evidence of
rigged machines, the rumours were persistant, not least because of
the increased suspicion from people within the company. Some of
them reached out to the press – such as in the case of sales
representative Hans Bühler (see below)
– and sometimes the press
reached out to them. In December 1995, The Baltimore Sun published
a series of short articles [10]
about how the NSA had supposedly
influenced the machines of the Swiss company Crypto AG.
Such stories were always rejected as 'pure invention'.
In 2014, it came to light – from released documents of the
Friedman Collection – that there had been some kind of
Gentleman's Agreement
between Hagelin and the NSA
from 1951 onwards. As part of this deal, Hagelin would not sell
secure machines to certain countries.
And in February 2020, ZDF,
SRF and The Washington Post revealed
that in 1970 the company had been secretly purchased by the BND
and the CIA, and that from 1994,
CIA had been the exclusive owner
[12].
➤ The Gentleman's Agreement (1951-1969)
➤ Operation RUBICON (1970-2018)
|
|
In 2014, the NSA
released more than 7600 documents [5], 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, at a personal level,
Hagelin
and Friedman were good
friends. They both grew up in the Russian Empire, and shared an
interest in historical cipher machines. Furthermore, they both
suffered from depressions.
The two became friends during WWII,
after Hagelin had 'escaped' to the US
in March 1940 and sold the design of the
M-209 cipher machine
to the Americans, who built no less than 140,000 of them.
After the war, they maintained their friendly contact.
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. Much of this
material was confiscated by NSA several years after Friedman's death.
An AFSA report of 12 April 1951
speaks of: 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
CX-52
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 home address for any further correspondence with Hagelin,
in order not to ring any bells. The result is that Hagelin and DIRNSA
enter into what they call a
Gentleman's Understanding.
In the following years, the details of the understanding –
by then known as the
Gentleman's Agreement – are revised several times.
➤ The Gentleman's Agreement
|
|
In 1992, Crypto AG's top sales representative
– Hans Bühler –
was arrested in Iran on dubious grounds. He spent the next nine months in
an Iranian prison – where he was interrogated three times a day – and was
released in January 1993, after a bail of US$ 1,000,000 had been payed.
|
After his release, he was severely traumatised, and claimed that the
company had not done enough to expedite his release. He also claimed that the
cipher machines that Crypto AG had sold to Iran (and to other countries) were
rigged; in other words: that they contain a
backdoor — a matter the Iranians had
questioned him about.
In the following months, Bühler got caught in a tangle of disputes, which
eventually caused him to get fired. This didn't stop him from talking to the
press though, and became the subject of Res Strehle's book shown in the
image on the right.
|
|
|
Since Hans Bühler went public, some of his former colleagues have decided
to step forward 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 his
cryptographic algorithm, for an alternative one
(allegedly supplied by the NSA)
that was clearly weaker [14].
This case is very similarity to the
deliberate weakening of the Philips PX-1000.
The Swiss Federal Police investigated some
of the allegations but said it was not able to find any proof.
In February 2020 it was revealed that at the time of the Bühler affair,
the company – Crypto AG – was jointly owned by the German BND and
the American CIA, which means that Bühler and his dissident colleagues
had been right all along. According to internal CIA
and BND documents,
the case of Hans Bühler
– to them known by the cryptonym HYDRA –
was the most damaging one in the history of
Operation RUBICON —
the secret purchase of Crypto AG (MINERVA).
In fact it was one of the reasons for the German Government to
back out of the covert operation in 1994 [12].
➤ More about Hans Bühler
|
|
|
Operation RUBICON
THESAURUS
|
|
|
|
In January 2018 — well before
Operation RUBICON
became known to the public —
it was announced that on 1 February 2018, the company
would be split into two new companies that would handle the national
and the international (Cyber) security business respectively [9].
The approximately 150 staff
would be split evenly between the two companies:
|
Crypto Schweiz AG management buyout - part of Crypto International Group AB, Sweden
|
Both companies remained in Zug (Switzerland), although the international
branch was now part of the Swedish
Crypto International Group AB, owned by the Swedish
entrepreneur Andreas Linde.
The national branch was the result of a
management buyout, led by Robert Schlup, Giuliano Otth (previously the
CEO of Crypto AG) and Thomas Meier (CEO of the affiliated
InfoGuard AG).
Note that Crypto International AG
was a completely new firm, registered at the existing address, whilst
the original Crypto AG was officially liquidated on 31 October 2019.
The company's assets were transferred to The Crypto Group AG (TCG) on the same day.
The assets of the licencing company – Prime Technology Licencing AG (PTL) –
had already been transferred to TCG on 17 January 2018.
PTC was liquidated on 17 January 2018.
TCG is in liquidation (August 2023) [19].
|
|
Following the revelations of the secret
Operation RUBICON
in February 2020 by The Washington Post, ZDF Television and SRF Television,
the Swiss Goverment withdrew the export licence of
Crypto International AG,
pending a formal investigation by the Swiss Parliament
and a criminal investigation by the Swiss Federal Police.
On 3 July 2020, the Swiss newspaper Neue Züricher Zeitung (NZZ) revealed
that Crypto International AG
was to layoff 83 of its 85 employees [15].
|
On 11 February 2021, the company moved its legal seat from Steinhausen to
a new address in Hünenberg and updated its website accordingly.
By June 2021 the old premises in Steinhausen was abandonned and the
famous CRYPTO-logo with the stylish
was removed from its facade.
According to the local newspaper Zuger Zeitung, plans were
underway for demolition of the 1966 factory and the administration buildings
to make room for approx. 200 appartments [16].
|
|
|
The image above was made on 1 April 2021 by professional photographer
Patrick Hürlimann in Steinhausen, when the company logo was removed
from the now abandonned building in Steinhausen. Over the course of
the past year, Patrick has made an impressive series of photographs
of the downfall of the once so dominant and famous Swiss company [17].
➤ More photographs
|
For many years, Crypto AG issued a house magazine at regular intervals –
typically three times a year – that was sent to its international customer
base. In later years, these magazines were also available in different
languages.
As these magazines give a good insight in the history of the company and
its products, we have made some of them available for download.
➤ Overview of Crypto AG Magazines
|
|
|
The timeline below provides a graphical presentation, in chronological
order, of the ownership of the company, its predecessor, its successors
and important events in its history. It also shows the involvement of
(foreign) intelligence services, in particular the
Gentleman's Agreement with the NSA (1951-1960),
the Licencing Agreement with the CIA (1960-1970) — also known as SPARTAN —
and the MINERVA purchase (1970-2018) —
also known as Operation THESAURUS
or RUBICON.
CyOne – initially known as Crypto Schweiz AG –
was split-off on 1 February 2018 in the form of a management buyout led by
Robert Schlupp, Giulliano Otth (then CEO of Crypto AG) and Thomas Meier
(then CEO of InfoGuard).
The company took over part of the Crypto AG assetts and part of the workforce.
They are currently active in the cyber security market.
InfoGuard (CIA: AURORA) was a subsidary of Crypto AG,
established in 1988 as a vehicle to sell equipment to the civil market. From
1989 to 1991, InfoGuard was a joint venture between Crypto AG
and Ascom, and from 1991 onwards a full subsidary
of Crypto AG again.
On 25 January 2018, InfoGuard was plit-off as result of
a management buyout lead by the same people as in the CyOne buyout:
Robert Schlupp, Giulliano Otth (then CEO of Crypto AG) and Thomas Meier
(the current CEO of InfoGuard).
Like CyOne, this company is active on the cyber security market.
Crypto International AG, was a new company – owned by the Swedish
entrepreneurs Andreas and Emma Linde –
that took over the international business of Crypto AG, part of its
workforce and the premises in Zug on 1 February 2018.
Shortly after Operation RUBICON was publicly
exposed, the company was largely dismantled in 2020/2021,
as its export licence had been revoked.
|
- US 2,089,603
Ciphering machine (C-35)
Boris Hagelin. Filed 23 August 1935.
Related to ➤ C-35 machine.
- US 2,247,170
Ciphering machine (BC-38)
Boris Hagelin. Filed 28 November 1938.
Related to ➤ 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.
- US 4,095,046
Electronic Enciphering and Deciphering Apparatus in the form of a Pocket Calculator
Peter Frutiger and Bruno Gemperle, on behalf of AEH.
Related to ➤ HC-520
Filed 1 November 1976, priority date 11 November 1975.
|
|
-
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.
- Crypto AG, Crypto AG is gearing up for future growth
24 January 2018.
- Scott Shane & Tom Bowman, Spy string: Few at the Swiss factory knew...
Baltimore Sun, 10 December 1995.
- Scott Shane & Tom Bowman, NSA's ... Rigged encryption machines
Baltimore Sun, 10 December 1995.
- Paul Reuvers & Marc Simons, Operation RUBICON
Crypto Museum, 19 March 2020.
- Verschlüsselt, Der Fall Hans Bühler
ISBN 3-85932-141-2. 1994.
- Line Dugstad & Osman Kibar, Den skjulte partneren
Dagens Næringsliv. Website. 2 january 2015 (updated 13 February 2015).
- Marcel Gyr, Crypto International enlässt fast die gesamte Belegschaft —
als Folge eines fragwürdigen Enscheids des Bundesrats
Neue Züricher Zeitung (NZZ), 3 July 2020.
- Zuger Zeitung, The final dismantling of Crypto AG
8 June June 2021. Photographs: Patrick Hürlimann, 7 April 2021.
- Patrick Hürlimann, Taking down the CRYPTO logo from the building in Steinhausen
1 April 2021. Reproduced here with permission from the artist.
- Monetas Handelsregister, TCG Legacy
Retrieved August 2023.
|
|
|
|
Any links shown in red are currently unavailable.
If you like the information on this website, why not make a donation?
© Crypto Museum. Created: Friday 17 July 2015. Last changed: Sunday, 03 September 2023 - 07:19 CET.
|
|
|
|
|
![1 April 2021 - the CRYPTO logo is removed from the building in Steinhausen. © Copyright Patrick Hürlimann Fotografie [17].](../ciag/img/303633/000/full.jpg)
