Crypto AG
| Company type | Private (formerly) |
|---|---|
| Industry | Communications and information security |
| Predecessor | AB Cryptoteknik |
| Founded | 1952 |
| Founder | Boris Hagelin |
| Defunct | 2018 |
| Fate | Dissolved; assets divided between CyOne and Crypto International AG |
| Successor | CyOne, Crypto International AG |
| Headquarters | Steinhausen , Switzerland |
Area served | Worldwide |
Key people | Boris Hagelin (founder), Andreas Linde (founder of successor Crypto International AG) |
| Products | Encryption devices and cipher machines (C-52, CX-52, CD-57, HX-63) |
| Owner | Covertly owned by CIA and West Germany’s BND (1970–~1993), then CIA exclusively (~1993–2018) |
Number of employees | Approximately 230 (recent); around 400 in 1970 (1970, recent (unspecified)) |
Crypto AG was a Swiss firm specializing in communications and information security, founded in 1952 by Boris Hagelin. In 1970, the company was covertly purchased for $5.75 million by the US Central Intelligence Agency (CIA) and West Germany’s Federal Intelligence Service (BND), who jointly owned it until approximately 1993. After that, the CIA maintained exclusive control until about 2018. This clandestine initiative, codenamed Operation Rubicon, aimed to intercept encrypted communications by controlling the encryption provider. Based in Steinhausen, Crypto AG was a well-established producer of encryption devices and cipher machines.
The enterprise employed around 230 staff members and maintained offices in locations including Abidjan, Abu Dhabi, Buenos Aires, Kuala Lumpur, Muscat, Selsdon, and its Swiss headquarters in Steinhausen, serving clients worldwide. Ownership was concealed through bearer shares, reportedly unknown even to the company’s own management.
Crypto AG attracted scrutiny for marketing encryption equipment with built-in vulnerabilities that intelligence agencies such as the American NSA, British GCHQ, and German BND exploited. Its products were sold to over 120 nations, among them India, Pakistan, Iran, and several countries in Latin America. Although neither the Soviet Union nor the People's Republic of China were direct purchasers, allied states utilized its technologies.
On 11 February 2020, investigations by The Washington Post, ZDF, and SRF disclosed Crypto AG’s secret ownership by the CIA and West German intelligence services, enabling these agencies to decrypt communications with ease. The operation was initially named "Thesaurus," later referred to as "Rubicon" by the BND and "Minerva" by the CIA. A Swiss parliamentary inquiry determined that Swiss intelligence agencies were aware of and profited from Crypto AG’s role in this US-led espionage scheme.
History
Crypto AG was founded in Switzerland by Russian-born Swedish entrepreneur Boris Hagelin. The company’s origins trace back to AB Cryptoteknik, established in Stockholm in 1920 by Arvid Gerhard Damm, which developed the patented C-36 mechanical cipher machine. Following Damm's death and prior to World War II, Hagelin assumed control with intentions to market the device to the United States Army. After Germany invaded Norway in 1940, Hagelin relocated to the US where he presented his machine to military intelligence officials, resulting in a licensing deal and production of approximately 140,000 units for American forces.
During his time in the United States, Hagelin cultivated a close professional relationship with William F. Friedman, who became NSA chief cryptologist in 1952. That same year, Hagelin's attorney Stuart Hedden was appointed CIA deputy commander and Inspector General. In 1948, Hagelin moved to Steinhausen, Switzerland for tax advantages; Crypto AG followed suit in 1952 amid concerns about Swedish government nationalization of defense contractors. A holding company was set up in Liechtenstein.
Throughout the 1950s, Hagelin and Friedman maintained regular correspondence about machine sales strategies and target customers. After Friedman retired in 1958, NSA officials Howard C. Barlow and Lawrence E. Shinn continued engagement with Crypto AG.
In June 1970, the CIA together with West Germany’s Federal Intelligence Service (BND) secretly acquired Crypto AG for $5.75 million, initiating Operation Rubikon. Prior overtures from French-German intelligence were declined after Hagelin consulted with the CIA. At the time of purchase, Crypto AG employed roughly 400 personnel and had increased annual revenue from 100,000 Swiss francs in the 1950s to 14 million Swiss francs by the 1970s.
In 1994, Crypto AG expanded through acquiring InfoGuard AG, a firm specializing in encryption solutions tailored for banking institutions. The company divested G.V. LLC—a Wyoming-based provider of encryption and interception technologies—in 2010.
Crypto AG was officially dissolved in 2018; its assets were divided between two successor companies: CyOne, focusing on Swiss domestic sales; and Crypto International AG—founded by Swedish entrepreneur Andreas Linde—which retained ownership of the brand name, international distribution channels, and product rights.
A parliamentary investigation conducted in 2020 revealed that Swiss authorities were aware of and benefited from Crypto AG’s involvement in this espionage operation led by the United States. The company’s story was also featured on BBC Radio 4’s Archive on 4 programme broadcast in May 2021.
Products
The firm provided encryption solutions for radio, Ethernet, STM, GSM, telephone, and fax communications.
Devices:
Compromised machines
Declassified documents from the US government released in 2015 disclosed that in 1955, Crypto AG’s founder Boris Hagelin and NSA cryptographer William Friedman forged an informal pact that undermined the security of certain C-52 cipher machines. Hagelin supplied technical specifications and client data to the NSA and GCHQ, allowing these agencies to substantially simplify the process of decrypting encrypted transmissions. Additionally, the NSA influenced sales policies restricting advanced models such as the CX-52 and produced operational manuals designed to weaken the security features of these devices.
For many years, suspicions surrounded Crypto AG regarding the manipulation of its encryption equipment in collaboration with intelligence organizations including the NSA, GCHQ, and Germany's BND. This enabled these agencies to intercept confidential communications effectively. These concerns intensified after US President Ronald Reagan referenced intercepted diplomatic messages as proof connecting Libya to the 1986 bombing of a West Berlin nightclub, which subsequently led to US airstrikes on Tripoli and Benghazi.
Further indications surfaced following the 1991 assassination of Iranian Prime Minister Shapour Bakhtiar when Iranian intelligence transmitted encrypted messages that Western governments were able to decode, heightening doubts about Crypto AG devices. In 1992, Crypto AG’s chief salesman Hans Buehler was detained in Tehran on allegations of leaking codes but was freed in 1993 after a $1 million bail was posted by Crypto AG. The company later terminated Buehler’s employment and sought compensation. Investigations by Swiss media outlets and Der Spiegel concluded that Crypto AG’s machines had been deliberately compromised multiple times.
Crypto AG refuted these accusations, citing a Swiss Federal Prosecutor inquiry conducted from 1994 to 1997 which found no proof of external interference or tampering. Nevertheless, experts remained doubtful, with reports indicating an active partnership between Crypto AG and Western intelligence agencies since 1956, including the modification of instruction manuals under NSA guidance. These assertions were validated by declassified US documents made public in 2015.
In 2020, joint investigations by The Washington Post, ZDF, and SRF uncovered that Crypto AG was wholly owned and operated covertly by the CIA and BND through clandestine programs known as "Thesaurus" and later "Rubicon," spanning from the post-World War II era until 2018.
After these disclosures, Swiss authorities enforced export restrictions on Crypto International AG, triggering diplomatic strains with Sweden. These measures reportedly caused Sweden to cancel its centennial diplomatic celebrations with Switzerland due to limitations imposed on procuring equipment from Crypto International.
See also
External links
- Crypto AG and Operation Rubicon at the Cryptomuseum
- The intelligence coup of the century by Greg Miller at the Washington Post outlining CIA’s role with Crypto AG
- La Suisse sous couverture, Episode 1, Agents infiltrés, Radio Télévision Suisse, November 2019 (link to Youtube with English subtitles)
- Cryptography companies
- Defence companies of Switzerland
- Defunct companies of Switzerland
- Technology companies established in 1952
- Technology companies disestablished in 2018
- Central Intelligence Agency front organizations
- Swiss companies established in 1952
- Swiss companies disestablished in 2018
- Companies based in the canton of Zug