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It’s paradoxical: in late August, the Federal Council sealed the end of the controversial encryption device maker. As a result, the entire workforce had to be laid off. But during the three-month notice period, Crypto International AG continues to produce its high-tech products that are in demand around the world.
The island’s dispute in the South China Sea, pictured an artificial atoll of the disputed Spratly Islands, creates the need for encryption devices.
The order recently arrived at the company’s headquarters in Steinhausen, Zurich: the navy of a state in conflict with China in connection with the island dispute in the South China Sea ordered encrypted communication applications worth several million Swiss francs to Crypto International AG. With this order alone, the annual salary of a few dozen specialists in the technology company could be paid.
This is just one of many orders recently received despite the existing export ban. A request for reconsideration from the Swedish couple of owners, Andreas and Emma Linde, was rejected by the Federal Council about a month ago. As long as the federal prosecutor’s office is investigating in relation to the crypto issue, the devices may not be released. The affair dates back to the last century and the Cold War, when the American secret service CIA (and sometimes its German counterpart BND) was the secret owner of the former Crypto AG.
Due to a secret CIA document leaked to a German journalist, the debate over Zug’s legendary company flared up again last February. Meanwhile, the parliamentary business audit delegation (GPDel) has investigated the case and the report will be published in November.
Production continues in Steinhausen
Emma and Andreas Linde: the buyers of Crypto International AG
Crypto International AG’s unwavering reputation (the international part of the former Crypo AG was bought by Lindes in 2018) illustrates that orders are still being received from all over the world in Switzerland, despite ongoing discussions. It is equally astonishing that the Zug-based company actually carries out most of the orders, carefully applying for an export permit from the State Secretariat for the Economy (Seco). Andreas Linde confirms the relevant NZZ information upon request. “Almost all of our employees continue to work during the three-month notification period.” At the end of August, as a result of the Federal Council’s decision, the company began the massive dismissal of practically the entire workforce, the last eighty employees. But apparently Linde has not entirely lost hope that an export permit will be issued for at least the goods already produced.
However, the Federal Prosecutor’s Office is not expected to clarify the matter in the short term. During a house search at the company’s headquarters in Steinhausen, investigators apparently confiscated equipment intended for export and sealed it. These are individual items that must be checked for possible tampering. However, the states in question or the companies affiliated with the states are vehemently opposed to the openness necessary for this. In several letters of complaint they warn the Swiss authorities against interference in the autonomy of the State. If sensitive encryption devices are opened, diplomatic consequences are threatened.
Diplomatic and financial damage
Sweden has already reacted. As recently reported by the “Sonntags-Blick” and confirmed by the FDFA, Chancellor Ignazio Cassis has been unloaded for a planned meeting with his Swedish counterpart. The meeting should have taken place on October 15 in Stockholm on the occasion of the centenary celebrations of diplomatic relations between the two friendly states. Not only the country of origin of the Lindes intervenes at the diplomatic level. According to information from the NZZ, the host countries have invited several Swiss embassies to hold discussions.
In addition to foreign policy frictions, Switzerland is also threatened with financial damage in the double-digit million range in the export risk insurance fund (Serv). In the case of a Swiss export company, foreign customers can apply for a corresponding bank loan for the volume of orders. The bank, in turn, can cover 95 percent of the loan with what is known as Serv Buyer’s Credit Insurance. Due to Crypto International AG’s export ban, several banks are now on the chalkboard. She’s trying to pass the damage on to the public service.
Is the CIA still in the game?
At least implicitly, the Swiss authorities assume that the owner couple Andreas and Emma Linde are still connected to the CIA and are not handing over any secure devices to their foreign clients. That should also have something to do with Andreas Linde’s past. The crypto industry was anything but new territory for him when he acquired part of the old Crypto AG in 2018. Linde’s father is the founder of the Swedish company Advenica, which has long produced NATO-certified encryption devices. Andreas Linde ran his father’s company for five years before leaving in 2015.
Jo Lang and Res Strehle, two crypto critics from the start, support the Federal Council’s decision. “After what happened, Switzerland cannot take the slightest risk of a tampered device being sold abroad,” says Lang, former National Councilor for Alternatives at Zug. “It is therefore right for the Federal Council to carry out a thorough examination.”
It’s incredible to Lang that the Lindes didn’t know about the previous connection to the CIA. Strehle puts you a little more cautious, as a journalist who has been investigating the cryptocurrency issue since the 1990s and has written two books on the matter. I’m almost inclined to believe Linde. But as an expert in the crypto industry, he should at least have done a background check on the Zug-based company’s intelligence before making the purchase. “
In an interview with NZZ in February, Linde commented on this in detail: Of course she had heard of the rumors, she said at the time. But because some of the best organizations in the world were still Crypto AG customers, he had to assume the rumors were wrong.
In a current statement, Linde also notes that it did not buy Crypto AG, but only acquired individual parts of it. Ironically, this includes the right to a name. “That was the worst decision of my entire career,” Linde laments. The similar name is probably the main reason why the two companies, which no longer have anything to do with each other, are constantly confused. Sometimes he even wonders if the Federal Council knows the difference. “It’s scary for me to be responsible for something that another company and another management were responsible for many years ago,” says Andreas Linde.
Internal knowledge is in the other company.
If personal continuity is taken as a criterion, Crypto International AG is actually not the successor company to the former CIA-controlled Crypto AG, but Crypto Schweiz AG. This now operates under the name Cyone Security AG and is responsible for the Swiss business. In particular, Armasuisse and the external department are supplied. After the management takeover in 2018, practically the entire management team of the old Crypto AG found themselves in the new Crypto Schweiz AG.
The management of Cyone Security AG has been formed by Giuliano Otth and Markus Stadler to this day. Overall, Otth had worked for the former Crypto AG for over 27 years, 16 of which as CEO (2002-2018). Stadler, for his part, was head of development at the former Crypto AG for almost 20 years (1999-2018). And the Chairman of the Board of Directors, Robert Schlup, also seamlessly switched from the CIA front company to Crypto Schweiz AG (he left office at the end of 2019).
At Crypto Schweiz AG and Cyone Security AG, there is a great deal of insider knowledge from the times owned by the CIA. However, it is not known whether those responsible, unlike the Lindes of Sweden, were prosecuted in any way by the Swiss authorities. It is said that not even the GPDel asked the best connoisseurs.
In response to a request from NZZ as to whether they were informed about the true ownership structure at the time of Crypto AG and whether they were aware of the alleged manipulations, Otth and Stadler sent a joint statement from a public relations office. “Giuliano Otth and Markus Stadler have focused exclusively on Cyone Security AG for almost three years and do not comment on anything related to the former Crypto AG.”
