Five men have been indicted in the United States in connection with the operations of Phantom Secure.
A statement from the Australian Federal Police (AFP) explains the individuals, including the company’s CEO who was taken into custody in California last week, are facing charges for knowingly participating in a criminal enterprise that “facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications”.
According to a criminal complaint previously filed in the US District Court, Phantom Secure technicians gutted BlackBerry handsets of their original hardware and software and installed new encryption software and an email program.
It will be alleged the Canadian-based company specifically designed devices for the organised crime market allowing criminals to use unrestricted, secure communications beyond the capability of law enforcement interception.
A law enforcement consortium, comprising the AFP, the US Federal Bureau of Investigation, the Royal Mounted Canadian Police, the Australian Criminal Intelligence Commission, New South Wales Crime Commission, New South Wales Police, Queensland Police, Victoria Police, South Australia Police, the Australian Taxation Office, and Austrac, has reportedly been working together to “successfully smash” the organised crime market, disabling the encrypted platform and the thousands of secure devices used on it.
Australian authorities allege Phantom Secure was the first encrypted communication platform available on a wholesale scale in Australia, and was the largest single supplier to the Australian organised crime market.
It is estimated by the FBI the number of devices sold and used in Australia since inception is in excess of 10,000 — the company’s largest customer base, accounting for over half of the total devices in circulation.
Phantom Secure allegedly charged customers between $2,000 and $3,000 for six-month subscriptions and were “specifically designed to prevent law enforcement from intercepting and monitoring communication”, the complaint details.
Australian authorities executed 19 search warrants on premises across four states on March 6, 2018, where more than 1,000 encrypted mobile devices were seized.
There was one arrest in Victoria for offences relating to drug possession and trafficking.
It was reported by the AFP the investigation began in early 2017.
“If organised criminals seek to move to other platforms we will remain steadfast and continue to disrupt and dismantle organised criminal activity wherever we can,” NSW Crime Commissioner Peter Bodor QC said.
The arrest of the head of an organisation helping criminals avoid legal surveillance will, more than likely, be used by those seeking a decryption magic bullet.
Last month, Australian Minister for Home Affairs Peter Dutton labelled “ubiquitous encryption” a “significant obstacle” to terrorism investigations.
According to the minister, more than 90 percent of counter-terrorism targets are using encryption for communications, including for attack planning in Australia.
“Decryption takes time, a precious commodity when threats may materialise in a matter of days or even hours,” Dutton said at the time. “Law enforcement access to encrypted communications should be on the same basis as telephone and other intercepts, in which companies provide vital and willing assistance in response to court orders.”
Speaking at a recent Senate Estimates hearing, Secretary of the Department of Home Affairs Michael Pezzullo said the government’s decryption solultion, when details on it are unveiled, would not “undermine legitimate encryption” and would balance societal needs for encryption.
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