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US indicts CEO of company that provides encrypted phones

The end of privacy?

The CEO of Canadian phone encryption firm Sky Global and an associate have been indicted by the US Department of Justice (DoJ) for “helping drug traffickers evade law enforcement” by allowing them to encrypt their phones. Similar privacy-invasive charges have been filed in Europe.

We obtained a copy of the indictment for you here.

It’s now becoming clear that authorities want to completely remove the right to privacy.

Phone encryption software providers usually work with Blackberry phones, but have more recently started working with Android phones, and install their own custom messaging apps that route texts through an encrypted infrastructure.

Criminals can evade charges because once their phones are seized, a remote wipe feature gets rid of all the evidence on their devices. These companies charge a premium fee, usually in the region of thousands of dollars, for their services.

“The indictment alleges that Sky Global generated hundreds of millions of dollars providing a service that allowed criminal networks around the world to hide their international drug trafficking activity from law enforcement,” said Acting US Attorney Randy Grossman during the announcement of the indictment. “This groundbreaking investigation should send a serious message to companies who think they can aid criminals in their unlawful activities.”

The CEO of an associate of Sky Global, Jean-Francois Eap and Thomas Herdman, was also indicted. The announcement described Eap and Herdman as “a former high-level distributor” of devices with Sky Global’s software. The firms are being charged under the federal Racketeer Influenced and Corrupt Organization (RICO) Act, which is usually used for mafia mob bosses. However, the Southern District of California has previously used the law against Phantom Secure, another phone encryption software provider.

The indictment marks only the second time the DoJ has gone after a phone encryption company. It shows that the DoJ is no longer viewing phone encryption companies as a “neutral party,” but companies that deliberately aid criminal activity.

“Sky Global’s purpose was to create, maintain, and control a method of secure communication to facilitate the importation, exportation, and distribution of heroin, cocaine and methamphetamine into Australia, Asia, Europe, and North America, including the United States and Canada; to launder the proceeds of such drug trafficking conduct; and to obstruct investigations of drug trafficking and money laundering organizations by creating, maintaining, and controlling a system whereby Sky Global would remotely delete evidence of such activities,” the DoJ said during the announcement.

The indictment comes only a few days after similar charges were filed in Europe. Law enforcement agencies in Europe claimed that they were able to recover about a billion messages from phones using Sky Global’s software, but have only been able to decrypt half.

Speaking to Motherboard, about the case in Europe, Sky Global insisted that its services are secure and claimed that a third party had installed and sold devices of a rogue version of its software and sold it to unsuspecting clients.

Eap said that the software helps legitimate businesses and individuals protect their privacy.

“The platform exists for the prevention of identity theft and hacking, the protection of personal privacy rights, and the secure operation of legitimate personal and business affairs. With the global rise of corporate espionage, cybercrime and malicious data breaches, privacy and protection of information is the foundation of the effective functioning for many industries including legal, public health, vaccine supply chains, manufacturers, celebrities and many more,” read a statement by Eap, sent to Motherboard.

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