US prosecutors have issued arrest warrants for two executives of Sky Global, which ran the largest encrypted phone service, following an international police operation to penetrate the company’s network and harvest “hundreds of millions” of messages.
A federal grand jury in the US has indicted Sky Global’s Canadian Chief Executive Office, Jean-François Eap and Thomas Herman a former phone distributor for racketeering and knowingly facilitating the import and distribution of illegal drugs through the sale of encrypted communications devices.
The US arrest warrants, issued on 12 March 2021, follow a series of raids by Belgian and Dutch Police on suspected drug traffickers following a joint operation with French law enforcement that harvested supposedly secure messages from the Sky ECC phone network.
Sky Global is the second encrypted phone network to face legal action in the Southern District of California. In 2018 executives of another encrypted phone network, Phantom Secure – also based in Canada – were indicted for providing encrypted mobile devices to criminal groups.
Phantom Secure’s chief executive, Vincent Ramos, pleaded guilty and admitted that he and others facilitated the distribution of drugs around the world by supplying encrypted communications devices to thwart law enforcement.
Sky Global, based in Vancouver Canada, supplied encrypted phones to 70,000 users world wide. It installed sophisticated encryption software on iPhones, Google Pixel, Blackberry and Nokia handsets, which routed encrypted text messages through servers in France and Canada, the indictment claims. The company used proxy servers to hide their location.
Sky Global’s employees and distributors are accused of adopting a “ask nothing/do nothing” approach towards its clients following the take down of Phantom Secure, in order to be able to plausibly deny knowledge of their client’s illegal activities.
People who worked with Sky Global or acted as phone distributors remained anonymous to each other and only interacted with phone uses, using their user names, email handles or nicknames, rather than client’s real names.
They are also accused of remotely deleting the contents of Sky ECC mobiles or suspending the phone service if it was suspected that an informant or law enforcement officer was using a phone as part of an investigation.
The company protected the identity of its customers by selling phones using crypto-currencies, including Bitcoin, which facilitated the laundering of customers “ill gotten gains”, the indictment claims. It’s administrators and distributors ran shell companies to hide the proceeds of encrypted phone sales.
The company is accused of generating profits of hundreds of millions of dollars for over ten years by facilitating transnational crime networks. It operated throughout the world, including Canada Columbia, Mexico, Belgium, Netherlands, Australia and the US.
The phones, known as Sky ECC, were sold online or through “authorised partners” for between €900 and €2,000, depending on the model. Sky Global’s technical team modified the phones to remove GPS, camera, internet and voice communications, to secure the devices. Subscriptions cost between $1,200 to $2,000 for six months.
Parallels with EncroChat
The French, Dutch and Belgian investigation into Sky ECC has strong parallels with an operation by the French to penetrate the EncroChat encrypted phone network, shut down in June 2020.
The UK’s National Crime Agency has made hundreds of arrests after the French Gendarmerie shared huge volumes of messages harvested from the network by a software “implant” with British investigators.
The UK’s investigation, dubbed Venetic, led to the seizure of cash, firearms including AK47 assault rifles, submachine guns and grenades, m ultiple luxury cars and luxury watches and tonnes of class A and B drugs.
Sky EC claimed in a statement last week before the arrest warrants were issued that a reseller has had been selling unauhorised phones from the defunct website www.skyecc.eu.
“We know that someone has been passing themselves off as an official reseller of Sky ECC for some time and we have been trying to shut it down through legal channels for almost two years,” said CEO Jean-François Eap in the statement.
The company said that photographs issues by the Belgian police, showed a modified skyecc.eu phone, rather than the standard Sky ECC app.