For decades, governments bought what they thought was a Swiss guarantee of secrecy. They got a trap instead. Crypto AG, a Swiss encryption firm, sold coding devices to more than 120 governments from the Cold War into the 2000s. Neutral brand. Neutral country. Great reputation. One problem: the CIA and West Germany’s BND secretly controlled the company starting in 1970.
Governments thought they were buying Swiss secrecy. They got a CIA and BND trap wearing a neutral brand.
The joint operation is widely known as Operation Rubicon, also called Thesaurus. Reportedly, the agencies controlled nearly every aspect of the business. The arrangement let Western agencies exploit trust in a neutral Swiss brand, and exploit it they did. That meant they controlled the algorithms too. And whoever controls the math controls what customers think is private.
The devices were reportedly rigged. Allegedly, they carried two forms of encryption: one secure, one deliberately weak. The weak one was a built-in backdoor. Customers thought they were locking the door. Spies already had a key. Diplomatic and government traffic, read at scale.
The reach was enormous. Access extended to more than 120 countries, though some reporting says about 130, and one source claims 148. Allies and adversaries alike. Crypto AG reportedly dominated 70% to 80% of the non-communist cryptography market. That is not a small slice. That is a chokehold. Thousands of messages were reportedly intercepted. Convenient, if you’re the one listening. By the 1980s, about 40% of foreign communications processed by US intelligence reportedly came from Crypto machines.
The timeline stretches long. The BND reportedly withdrew in 1993. The CIA stayed involved until 2018, when Crypto was liquidated. Then, in February 2020, a joint media investigation blew it open. Swiss authorities opened an investigation. Outrage followed, and it made sense. Governments had relied on these machines as secure communication tools. Media reports stressed that these machines were sold as protection against exactly this kind of snooping. Instead, a trusted Swiss name had been used against them. So much for neutrality.
The case shows how a trusted hardware supplier can become a long-term espionage channel. It tied industrial control, cryptography, and intelligence strategy into one covert program. Friendly states got hit. Hostile states got hit. Nobody got a pass. Hardware trust, it turns out, is a very fragile thing.
It is also a major example of state-backed supply-chain compromise in cryptography. Today, the scandal remains a benchmark for debates about backdoors and hardware trust. The story also wrecked Crypto AG’s reputation as a neutral encryption provider. Such damage illustrates how reputational risks arise when public perception erodes trust in a platform or provider. The lesson is blunt. A secure device is only as honest as the people behind it.
Investigators later found that the Swiss Strategic Intelligence Service had known of foreign involvement since 1993, which deepened the outrage.
