Governments once trusted one small firm to keep their secrets. It sold encryption machines to more than 120 nations, and for decades it was secretly owned by the CIA. This is the story of how that happened and how the world found out. It began over dinner in 1951. Boris Hagelin, a Swedish inventor, sat down with William Friedman, the American known as the father of his country's codebreaking. Hagelin had invented a cipher machine that American soldiers relied on during the war. Now he wanted customers. Friedman wanted something too. They struck a gentleman's agreement. Hagelin would sell his most secure machines only to countries Washington approved. Everyone else would get older, weaker ones. In return, Hagelin received secret cash for the markets he lost. How far would a deal made over one dinner go?
The Crypto AG Scandal
The CIA and West German intelligence secretly bought Crypto AG in 1970 and read the secrets of more than 120 nations.
A Dinner in 1951
Frequently Asked Questions
What was the Crypto AG scandal?
Crypto AG sold encryption machines to more than 120 nations. From 1970 it was secretly owned by the CIA and West German intelligence, who rigged the machines so the NSA could read the messages they protected.
How did the rigged machines work?
The key generators were manipulated so the number of possible combinations shrank drastically. The output looked random to customers but was easy for the NSA to solve. The NSA also wrote manuals for some models, such as the CX-52, that pushed customers toward weak usage.
How did the secret finally come out?
Salesman Hans Buehler was jailed in Iran in 1992, then fired and pursued for the ransom, and he went to the Swiss media. His story first linked the company to Western intelligence. In 2020 a joint investigation by a newspaper and two broadcasters confirmed the full ownership.
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