December 2003 - cypherpunks-legacy

Rememberance Day 1998.
by Jean-Francois Avon 17 Dec '03

17 Dec '03

================= forwarded from CFD V2 #696 ============ Date: Fri, 13 Nov 1998 06:03:49 -0600 From: Dan MacInnis <dan.louise(a)sympatico.ca> Subject: Rememberance Day 1998. It is past eleven O'clock here. It is November 11th, 1998. On this date every year my mind always returns to thoughts of my uncle, whose body, it's elements long ago returned to the earth, the dust undisturbed in a European grave, the man for whom I was renamed when the sad news reached my mother and grandfather on that early spring morning many years ago. Even as child their wet faces impacted me, forever. It drifted today to Ottawa, where I once stood cold but proud close to one Paul Hellyer, then Minister of National Defense under the Honorable Prime Minister Lester Bowles Pearson. It was Rememberance Day, Paul was delivering the obligatory service beside a Cenotaph, the soldiers, sailors and airmen stood at ease waiting for the ceremonies to end, pretending to listen to his resonant, educated voice. It was a bitter cold day, I knew they would prefer to be at their homes, or in their messes or just anyplace but on parade that day. I was proud to be associated with a government, indeed a country even, with such diversity, such room for individuals to work, play and overcome the challenges each would experience. It honestly was a Free Canada, individuals could aspire to whatever their imaginations deemed them worthy to become. Later that evening, at a Military function, a member of the RCAF suggested to me, each of us with the government issued glass in the right hand, white serviette properly wrapped around it to keep the hand warm and dry for handshaking, that someday he expected I would be Minister of National Defense. Sadly enough, we both believed it. But today is November 11th, 1998, at about 11:50 AM. My pride in the Liberal Party of Canada has been shattered. My belief that issues like Conscription, which polarized our founding peoples for two generations, would never surface, ever again, gone. My belief that MY PARTY stood for individual rights, the only force that would stand between the Elite's and the common person, gone. Forever. So it a doubly sad day for me. My uncle, and my Party. Bill C68 has intruded into the lives of so many Canadians, and if left to stand as is, will undermine everything I stood there that cold Ottawa morning to pay tribute, and everything my uncle died for in that foreign field so long ago. He died with no idea the rifle he carried to fight for our freedoms would become such a divisive symbol a few short years later. On this morning I shall not revisit the implications of C68. Rather, I will ask those struggling to preserve out heritage to continue the fight. Do not surrender. Then, when it becomes our time to let our earthly possessions go, when our bodies begin the journey back to the dust from whence they came and our spirits return to source, perhaps the cold white silk of the casket or the sides of the urn holding our ashes will be a bit warmer knowing we did all we could for those who follow. Anything less of us would be shameful.

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RE: Rivest Patent
by Harvey Rook (Exchange) 17 Dec '03

17 Dec '03

It's a little bit more complicated than that. RC-6, which also uses data dependant rotations is patent free. Harv. > -----Original Message----- > From: Eric Cordian [mailto:emc@wire.insync.net] > Sent: Friday, November 13, 1998 11:25 AM > To: cypherpunks(a)cyberpass.net > Subject: Re: Rivest Patent > > > JYA writes: > > > Ron Rivest received on November 10 "US Patent 5835600: > > Block encryption algorithm with data-dependent rotations:" > > http://jya.com/rivest111098.htm (22K) > > So we can't use the rotate instruction with a data-dependent shift > count in a block encryption algorithm without a license from Ron? > > Foo on that. > > -- > Sponsor the DES Analytic Crack Project > http://www.cyberspace.org/~enoch/crakfaq.html >

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Re: Info Age Crime Terror and War
by Ernest Hua 17 Dec '03

17 Dec '03

Tim May wrote: > At 9:09 AM -0800 11/13/98, John Young wrote: > > Senator Kyl has issued a long report, "Crime, Terror & > > War: National Security and Public Safety in the Information > > Age," ... > > http://jya.com/ctw.htm (97K) > > I'll address one section, near the end of the report: > ... While I wholeheartly believe that the open-minded and interested public would want to hear these mindless rants responded to with some rationality and reason, I don't believe, for a moment that Kyl & gang are serious about debating anything. (Ok, there is a TEENY chance he is just confused.) My money on the claim that these are yet more rhetoric thrown out to confuse as many people who are easily taken over by sound bites as possible. It's not as easy to explain the practical reasons why crypto restrictions are unenforcible and unreasonable, but it's easy to trumpet the national security cause and to raise the spectre of police not being able to protect lil' Johnny and Mary. What I was hoping for from the pro-crypto ads was something like this: 1. Lil' Suzy writes E-Mail to Lil' Mary to meet at the mall at some well-lighted public place. 2. Child molestor X intercepts E-Mail, but it's weak 40-bit encryption, and he breaks it. 3. Mr. X forges E-Mail from Mary to Suzy changing the meeting location to some dark corner A, and forges E-Mail from Suzy to Mary changing the meeting locaiton to some dark corner B. 4. Mr. X's co-conspirators, Mr. Y and Mr Z intercepts Mary and Suzy at the respective dark corners ... they scream for help ... no one answers at either location ... fade to black ... This is the sort of stuff that would really counter the stupid rhetoric from Sen. Kyl. Ern

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U.S. Attorney Morgenthau on Money Laundering
by David Watts 17 Dec '03

17 Dec '03

New York Times November 9, 1998, Monday Editorial Desk On the Trail of Global Capital By Robert M. Morgenthau What are the five largest financial centers in the world? Many will name New York, London, Tokyo and Hong Kong. But how many will guess the fifth? It's the Cayman Islands -- or so, at least, its Government claims on its Web site. It's certainly the case that huge companies -- including hedge funds like Long-Term Capital Management -- have made the Caymans their nominal home. And bank regulators in the United States have confirmed that bank deposits on the islands now total about $500 billion, twice the amount of four years ago and more than the amount on deposit in the New York Federal Reserve District. That is about $14 million for every man, woman and child in the Caymans. The financial community there consists of 575 banks and trust companies. More than 20,000 corporations are chartered on the Caymans. What draws so many capitalists to so unlikely a spot? Secrecy, for one thing. In the United States, capital markets are regulated by requiring transparency in financial dealings. The Caymans, by contrast, have no such openness, no tiresome restrictions on the pursuit of wealth. With respect to regulation, the Caymans have won the race to the bottom. Take, for example, Long-Term Capital Management, which had to be bailed out earlier this year. The fund's basic operations are conducted in Connecticut, but it is chartered in the Cayman Islands. The fund kept the details of its borrowings and investments secret -- a result not obtainable where there must be concerns for the curiosity of regulators. The results were disastrous. No one knew the absurd extent to which Long-Term Capital's confident superstars were leveraging their assets -- until the bubble burst. The Caymans' financial secrecy laws make it easy to hide suspect dealings. It is now well known that the Bank of Credit and Commerce International, whose collapse in 1991 was the biggest banking scandal in history, took advantage of those laws. Beyond the assistance they lend to criminals, secrecy laws aid reckless acts by high-rolling entrepreneurs. But in fact, most of the ''offshore'' Cayman banks are run not from the islands, but from New York. Amazingly, the Cayman Government Web site itself boasts that, of the 575 banks and trust companies ''based'' in the islands, a full 106 actually have a physical presence there! Resort to these institutions is a simple charade. What would happen if a determined American bank inspector flew to the islands and demanded to see the books of one of these institutions? He would be arrested. It's the law. There is yet another explanation for the remarkable blossoming of financial institutions in the Cayman Islands. The islands have no income tax, no capital gains tax, no value added tax, no sales tax, no inheritance tax and no tax treaties. Sophisticated Americans place billions in Cayman investment vehicles like Long-Term Capital that are carefully structured to reduce American tax liability. Citizens of other countries invest billions there so their incomes will be exempt from American taxes. Commendably, the Treasury Department recently resolved to study ways to keep sham transactions from having an impact on tax liabilities, and the Group of Seven industrialized nations has said that hedge funds should ''possibly'' be subject to disclosure rules. But those are only tentative steps. More can be done. The Cayman Islands are a British dependency, and both the governor and the attorney general are appointed by the British Government. This means Britain can end the laissez-faire practices of the islands. And since, from a financial perspective, the islands are an American dependency, Washington can also stop the offshore shenanigans -- for instance, by imposing more prudent oversight of lenders doing business with Cayman entities. The Caymans are only part of the problem. The Isle of Jersey, the British Virgin Islands, Cyprus, Antigua, Liechtenstein, Panama, the Netherlands Antilles, the Bahamas, Luxembourg and, of course, Switzerland all offer ''offshore'' sanctuary. Until action is taken to eliminate these havens, taxpayers and honest players in the financial markets will be at a very unfair disadvantage. _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com

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nCipher joined KRAP/GAK drive too?
by Adam Back 17 Dec '03

17 Dec '03

This arose out of a discussion on ukcrypto about NAI (which PGP Inc is now part of) having recently rejoined the KRA list -- I notice that nCipher are on it too, and there was a earlier exchange on ukcrypto about nCipher... ========= nCipher too are now on the KRAP list (wonder how long for?) Bruce Tober forwards from www.kra.org: > [...] > nCipher Corporation Ltd. nCipher fairly recently made some press release that was commented on on this list as sounding a bit in favour of UK/DTI/GCHQ GAK attempts. Then they claimed that it was just being read incorrectly and the text was neutral and the title that was badly chosen and by hired PR. So nCipher guys, how do you explain the membership of KRAP away? >From the last list discussion, Ian Jackson, who works for nCipher wrote: : We do not have any weakened or GAK products. The Marketing Director : has assured me that we have no plans to produce any. also: : So, in summary, there are no artificial restrictions on the sizes of : keys which can be used, generated or stored by our units, and no : backdoor GAK or key recovery facilities. given the KRAP membership one might have cause to be worry that this may not still be true. Perhaps people using recent nCipher boards or with recent software upgrades ought to read the specs real closely -- to see if it admits to encrypting stuff to GCHQ also! Ian also wrote (in a post marked as not an official nCipher statement): : I personally would feel that putting deliberate backdoors or other : similar things into our products would be highly unethical and I would : have nothing to do with it. and: : This has nothing to do with the spooks or escrow or anything of the : kind. That's what GAK and KRAP is all about -- putting backdoors into products which the government and secret service groups like GCHQ, NSA and ECHELON get the keys to. and: : I do believe that the personal views of senior management at : nCipher - particularly towards the technical end - are opposed to : escrow et al. Perhaps those technical types could have a go at prevailing over whichever marketing type or suit decided to sign up for KRAP. This is not intended to attack Ian, as he seemed pretty much against GAK, and Niko van Someren to some extent too. Not so sure about the other non technical can Someren, but clearly someone in nCipher thinks KRAP and GAK are a good marketing ploy. Otherwise, I figure you're better off giving money to DEC alpha than supporting GAKkers. Alpha's run SSLeay pretty fast. Adam ========= and a second post, with more specifics: ========= I wrote: > nCipher too are now on the KRAP list (wonder how long for?) here we go: http://www.ncipher.com/news/files/press/97/keyrecov.html since May 97! contains such gems as: : We are delighted to support the Key Recovery Alliance," said : Alex van Someren, President of nCipher. so that pin-points at least one GAK enthousiast at nCipher. It also makes for some rather strange contradictions. The flap about nCiphers apparent whole-hearted support for DTI GAK attempts was May this year -- nCipher had already been a paid up KRAP member for a whole year. press release continues (least there is any confusion as to what KRA as an organisation is about): : Encryption makes information readable only to a person holding a : unique "key" which will unlock the data. Encryption is critical to : ensure the security of sensitive information that is either stored : electronically or sent over public networks such as the Internet. : Key recovery is a new method that allows for authorized access : to encrypted information without the need to store or "escrow" : any encryption keys with a third party. Key recovery is an : effective tool to meet commercial, private and institutional needs. institutions obliquely mentioned being presumably the likes of GCHQ and NSA? yet Ian was saying: > : So, in summary, there are no artificial restrictions on the sizes of > : keys which can be used, generated or stored by our units, and no > : backdoor GAK or key recovery facilities. saying there were no key recovery facilities, and : We do not have any weakened or GAK products. The Marketing Director : has assured me that we have no plans to produce any. and no plans to install any. yet this is what KRA is all about, and they were signed up to it already at that time. I suppose someone is now going to try to claim that KRA is all about key recovery for commercial purposes, but not for government -- but this is not the way I understand that KRA came into being at all. I think it is very much a NSA led attempt to further the clipper attempts. If I recall it started in the wake of the NSA/NIST attempts at clipper IV (or whatever number it was at by then) to coerce companies into including software based key escrow. Probably tied up with the permission to use marginally higher key lengths if the company can demonstrate to NSA a plan to introduce GAK in two year time scale (within the US), though I may be forgetting the details. Anyone like to clarify KRAs aims and history? Adam

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[ISN] Privacy Group Pushes For Hearings on ECHELON (fwd)
by Jukka E Isosaari 17 Dec '03

17 Dec '03

---------- Forwarded message ---------- Date: Fri, 13 Nov 1998 06:52:45 -0700 (MST) From: mea culpa <jericho(a)dimensional.com> To: InfoSec News <isn(a)repsec.com> Subject: [ISN] Privacy Group Pushes For Hearings on ECHELON Push for hearings on Echelon: Global spy system needs scrutiny, says rights group http://www.worldnetdaily.com/bluesky_exnews/19981112_xex_push_hearing.shtml Stephan Archer In an effort to create some accountability between the country's citizens and the National Security Agency's top-secret global surveillance system known as Echelon, the Free Congress Foundation is urging that congressional hearings be held concerning the NSA's use of the system. Originally, Echelon was designed to spy on the Communist Bloc during the Cold War. However, since the end of the Cold War, the NSA has used it for other questionable purposes that include spying on the citizens of U.S. allies as well as the citizens of other countries, commercial spying, and even domestic spying. In essence, Echelon works through a series of high-tech spy facilities located primarily in five countries: the United States, Canada, England, New Zealand, and Australia. These countries, which are sworn to secrecy about the project in a secret agreement known as UKUSA, all actively take part in this encroachment of privacy into the lives of the people of the world by collecting virtually all fax transmissions, e-mails, and phone calls. Not even cellular phone calls escape the grasp of the Echelon system. "Obviously, we need to have these capabilities," said Wayne Madsen, who worked in the National COMSEC Assessment Center at the NSA's Fort Meade, Maryland, facility back in the 1980s and is currently a senior fellow at the Electronic Privacy Information Center. As an example of our country's need for the system, Madsen said, "No one can argue about using the system to counter terrorism. Where people will have a problem is where Echelon is used for political and business interests." The Echelon system gets most of its data by collecting all transmissions handled by the Intelsat and Inmarsat satellites, which are responsible for much of the electronic communication that takes place between countries. Earth-bound communication is sucked up and absorbed by other spy satellites that the NSA has launched into space. "It's a huge vacuum cleaner," said Madsen. Once these spy facilities collect the phone calls, e-mails, and faxes, of virtually everyone on earth, the Echelon system sorts them through a kind of filter system known as the Echelon dictionary. This dictionary looks for "flag" words in all of the transmitted communication. While it lets a majority of all collected material pass through its filter, it tags those that may pose a threat and tracks all subsequent communication coming from the source of the original "flagged" message. Concerning Echelon's inherent intrusion on people's privacy, Patrick Poole, the deputy director for the Center of Technology Policy at the Free Congress Foundation, said, "While we understand the need for the intelligence power embodied by Echelon, the indiscriminate use of Echelon presents major threats to liberty not only to U.S. citizens but to citizens around the world." And this threat is real. The foundation's report states that U.S. leaders have, in fact, already abused this awesome technology. For example, the report states the following: "In September 1993, President Clinton asked the CIA to spy on Japanese auto manufacturers that were designing zero-emission cars and to forward that information to the Big Three U.S. car manufacturers: Ford, General Motors and Chrysler." "You can assume that all major U.S. corporations are fed items of interest (via Echelon) from time to time to give them a leg up on international competitors," said Madsen. Although this may be seen as a strategic corporate weapon for American businesses, in reality, it's an example of technology that can get out of hand. For example, former Canadian spy Mike Frost stated in his book, "Spyworld," that in 1981, there was an "accidental" cell phone intercept of the American ambassador to Canada that resulted in the U.S. getting outbid by the Canadians in a grain deal with China. The deal brought in $2.5 billion for the Canadian Wheat Board. With this kind of abuse of Echelon's power, the question as to whether or not the U.S. government has been using this power for political purposes can be easily raised. This question is seemingly answered in the foundation's report. "The discovery of domestic surveillance targeted at American civilians for reasons of 'unpopular' political affiliation -- or for no probable cause at all -- in violation of the First, Fourth and Fifth Amendments of the Constitution is regularly impeded by very elaborate and complex legal arguments and privilege claims by the intelligence agencies and the U.S. government," the report says. When asked if the system has been used by the U.S. government to spy on its citizens, Madsen told WorldNetDaily that he was sure it has been. "I don't believe that the NSA or the current Administration would hesitate to use this system on American citizens for their own agendas," he said. Outraged by this flagrant abuse of power illustrated by our country's elected officials, Poole said, "While the U.S. is the prime mover behind the Echelon system, it's shameful that the European Parliament is the body holding the constitutional debate in regards to Echelon today." A September 1998 report for the European Parliament by the Omega Foundation said, "Within Europe, all e-mail, telephone, and fax communications are routinely intercepted by the United States National Security Agency. According to the Omega Foundation report, it is this ability of the NSA that brings major concern to the European Parliament. In an effort to bring the issues surrounding Echelon to the forefront of American politics, the Free Congress Foundation plans to send out a report about Echelon to all of the 500 policy organizations in the U.S. as well as to select members of Congress. These select individuals include members from both the House and Senate intelligence committees as well as House and Senate Constitution subcommittees. Copies of the report will also be sent to the congressional leadership of both parties. Although the foundation is hoping to get some action out of these members of Congress, Poole said that support at the grassroots level of our nation's political structure will be a must if this issue isn't to end up buried by the intelligence committees. "For there to be any account and oversight to the Echelon system, the American people are going to have to contact their elected representatives in order to investigate the abuses that we know have occurred in regards to the Echelon system," Poole said. See Free Congress Foundation's report on Echelon at: http://www.freecongress.org/ctp/echelon.html -o- Subscribe: mail majordomo(a)repsec.com with "subscribe isn". Today's ISN Sponsor: Repent Security Incorporated [www.repsec.com]

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Enter Symbol's Developer Contest at the Palm Computing Platform Developer Conference!!! (revised message)
by palmdeveloper＠palmdevcon.com 17 Dec '03

17 Dec '03

Symbol announces the first annual Symbol SPT 1500 Developer Contest!!!!! You could win a Toshiba Tecra 780 DVD 266 MHz Pentium II Notebook by developing the Best SPT 1500 Application or You could win a EXP PC Card DVD Traveler Bundle by developing the Best Riverbed Scout MTS Application or the Best Puma Satellite Forms Application or the Best IDEAM EZTrak Application. Other cool prizes will also be awarded. Everyone who participates will receive a t-shirt. You must be a registered attendee of the Palm Computing Developer Conference to participate. Winners will be announced at the Conference on December 4. For more details on the contest, and to register for the conference, point your browser to http://www.palmdevcon.com.

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Enter Symbol's Developer Contest at the Palm Computing Platform Developer Conference!!! (revised message)
by palmdeveloper＠palmdevcon.com 17 Dec '03

17 Dec '03

Symbol announces the first annual Symbol SPT 1500 Developer Contest!!!!! You could win a Toshiba Tecra 780 DVD 266 MHz Pentium II Notebook by developing the Best SPT 1500 Application or You could win a EXP PC Card DVD Traveler Bundle by developing the Best Riverbed Scout MTS Application or the Best Puma Satellite Forms Application or the Best IDEAM EZTrak Application. Other cool prizes will also be awarded. Everyone who participates will receive a t-shirt. You must be a registered attendee of the Palm Computing Developer Conference to participate. Winners will be announced at the Conference on December 4. For more details on the contest, and to register for the conference, point your browser to http://www.palmdevcon.com.

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Re: DBS, Privacy, Money Laundering nonsense.
by Robert Hettinga 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- At 11:57 PM -0500 on 11/13/98, Black Unicorn wrote: > If only we could be rid of this pesky cash would could eliminate organized > crime forever. Reminds me of something Vinnie Moscaritolo, my alter ego and Samoan attorney, once said. "'If we could just pass a few more laws' we could all be criminals." Nonetheless, I think that DBS will be much more about economics than privacy or even law. The contrapositive of Unicorn's excellent rant is that the market for money "laundering" and financial privacy is a rediculuously small fraction of the market for economic efficiency. That digital bearer settlement gives us more or less perfect financial privacy if done under certain conditions is much more a happy accident than anything else, just like the cheapest way to do a transaction prior to blind signatures and hash collisions was with book-entry transactions instead of paper bearer certificates. I suppose it *might* turn out that you really *can* do an instantaneously executing, clearing, and settling on-line realtime book-entry transaction, for everything from pico- to quadridollars, and it would be cheaper, both macroeconomically and microeconomically, than a digital bearer one, but I just don't think it's possible at all. And, of course, we wouldn't have coach fare to Cleveland without a bunch of "fanatics" out there, prattling away about slipping the surly bounds of earth, the joy of flight, and all that... ;-). Thank god for the "fanatics", I say, but let's make sure we pay attention to Bill Bradley's adage that it's bad luck to be behind at the end of the game. Whatever is cheapest while still remaining a functional bearer protocol wins, in other words. And, in my book, "functional" means "functionally anonymous". It's just cheaper that way. Having a plane that actually flies is way cheaper than one which just goes fast down the runway, or even one which scoots along nicely off the ground, but only in ground effect. Cheers, Bob Hettinga -----BEGIN PGP SIGNATURE----- Version: PGP for Personal Privacy 5.5.5 iQEVAwUBNk0f7cUCGwxmWcHhAQErBQgAhaFscqaknL0EMnsiKMWYgoHntw88JE2Z 11K8/oyoG/dX8eus5Wqnh05eVY8JWGQ9Fu3C2uXPZbZCa5wh7tjrmIcWOTDgx8kC Sz11IJJLdcWrdTPw7a1sf/WwhyG4f7NVlyVGNqMVuGrBjImsC5TtG2yU39DVME08 ZR3bVdn6egcCDpve+E7RQ0LYWDHxitxYV3RIaCG/wj9zp5JrMPTAvIgbT+J62T8s bYUNJyf7XQnkcT5275VLAzFYy+3KBRuyp9k6uIhBaBGKBNRUw/wBwTB8NoBMPcd8 AT3276SNz1oBA+Z/R0JPRBrRkAfio2o3DFIXoC5NY49ikpBuyOEQHg== =R0aY -----END PGP SIGNATURE----- ----------------- Robert A. Hettinga <mailto: rah(a)philodox.com> Philodox Financial Technology Evangelism <http://www.philodox.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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New Electronic Financial Services Links
by Robert Hettinga 17 Dec '03

17 Dec '03

--- begin forwarded text X-Sender: johnmuller(a)mail.earthlink.net Date: Fri, 13 Nov 1998 16:11:55 -0800 To: e-carm(a)c3po.kc-inc.net, dbs(a)philodox.com, dcsb(a)ai.mit.edu From: John Muller <johnmuller(a)earthlink.net> Subject: New Electronic Financial Services Links Mime-Version: 1.0 Sender: <dbs(a)philodox.com> Precedence: Bulk List-Subscribe: <mailto:requests@philodox.com?subject=subscribe%20dbs> X-Web-Archive: http://www.philodox.com/dbs-archive/ New links that will shortly be added to the ABA Joint Subcommittee on Electronic Financial Services Web site (http://www.abanet.org/buslaw/efss) in no particular order: Dept. of Commerce request for input on data privacy principles "safe harbor" http://www.ita.doc.gov/ecom/menu.htm SEC announces 23 enforcement actions for Internet stock fraud http://www.sec.gov/news/netfraud.htm RISKS Digest Vol. 20 No. 6, Dan Geer - "Risk Management is Where the Money Is" http://catless.ncl.ac.uk/Risks/20.06.html European Commission proposes a directive on distance selling of financial services http://europa.eu.int/comm/dg15/en/finances/consumer/891.htm European Commission proposes a framework for the European financial services sector to facilitate cross-border operation http://europa.eu.int/comm/dg15/en/finances/general/fsen.htm European Commission press release: the EU Data Protection Directive takes effect http://europa.eu.int/comm/dg15/en/media/dataprot/news/925.htm Federal Reserve announcement on enhanced settlement services http://www.bog.frb.fed.us/boarddocs/press/BoardActs/1998/19981103/ Federal Reserve announcement of reduction in fees for electronic payment services http://www.bog.frb.fed.us/boarddocs/press/BoardActs/1998/19981104/ OTS policy statement on privacy of customer information http://www.ots.treas.gov/docs/77879.html Journal of Information Law and Technology issue on Globalisation and E-commerce http://elj.warwick.ac.uk/jilt/issue/1998_3/default.htm Papers from the 21st National Information Systems Security Conference http://csrc.nist.gov/nissc/1998/papers.html BCI - Northern Trust 2nd Circuit case under UCC Article 4A and common law seeking a return of funds from an electronic funds transfer http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3 /97-7633.opn.html Hogan Systems v. Cybresource 5th Circuit decision on copyright and trade secret claims arising out of third party contractor use of software licensed to a bank http://laws.findlaw.com/5th/9710645CV0.html FTC comments on proposed UCC Article 2B http://www.ftc.gov/be/v980032.htm The ERISA Industry Committee comments to the IRS on the use of new technologies in retirement plans http://www.eric.org/testimony/technologies.htm Council of Europe - model contract clauses on transborder data flows http://www.coe.fr/dataprotection/ectype.htm E*Trade invests in International Securities Exchange, an electronic options exchange in development http://www.etrade.com/cgi-bin/gx.cgi/AppLogic+Home?gxml=pr111098c.html Electronic Markets Vol. 11 No. 3 on electronic contracting http://www.electronicmarkets.org/netacademy/publications.nsf/all_pk/929 Adrian McCullagh article on Trust in Electronic Commerce http://www.acs.org.au/president/1998/past/io98/etrust.htm CheckFree and others form the Electronic Banking Association http://www.e-banking.org/ John Muller johnmuller(a)earthlink.net "Things are not as they seem, neither are they otherwise" --- end forwarded text ----------------- Robert A. Hettinga <mailto: rah(a)philodox.com> Philodox Financial Technology Evangelism <http://www.philodox.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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DBS, Privacy, Money Laundering nonsense.
by Robert Hettinga 17 Dec '03

17 Dec '03

--- begin forwarded text From: "Black Unicorn" <unicorn(a)schloss.li> To: <tboyle(a)rosehill.net>, "dbs" <dbs(a)philodox.com> Subject: DBS, Privacy, Money Laundering nonsense. Date: Fri, 13 Nov 1998 22:57:51 -0600 Keywords: dbs MIME-Version: 1.0 X-Priority: 3 (Normal) X-MSMail-Priority: Normal Importance: Normal X-MimeOLE: Produced By Microsoft MimeOLE V4.72.2106.4 Sender: <dbs(a)philodox.com> Precedence: Bulk List-Subscribe: <mailto:requests@philodox.com?subject=subscribe%20dbs> X-Web-Archive: http://www.philodox.com/dbs-archive/ tboyle(a)rosehill.net comments: [...] > But I simply cannot comprehend the breadth of the agreement > on this dbs conference, and depth of conviction, that DBS money > should be designed with the **deliberate objective** of being > untraceable, for purposes of law enforcement or taxation. In the case of some DBS advocates you are overstating the matter. In the case of others, vastly understating it. > I have a lot of respect for you guys' intellect but I think > you're wrong on two fundamental points: > > 1. Rule of law. Money laundering is a critical piece in > organized crime. The democratic countries have banking laws. > Do you think these laws should be followed, or NOT? (Scurrying > of feet as all the DBS readers avoid answering.) Well let's examine this. The view that all democratic countries have banking laws really begs the question. "What are the differences between said laws." I can tell you with solid authority, they are many. I've often repeated this story here and elsewhere. It's all a matter of public record. Set the way-back-machine to just after Reagan has entered office. Ole Ron began to crack down on tax evasion and in particular offshore havens. Taxes would be cut, it was reasoned, but only if loopholes were filled and evaders rooted out. (Those of us old enough to remember might even recall nodding at the sense of it). This policy was particular hard on certain Caribbean nations. This was the time of operation Tradewinds (search for it in the congressional record) and other IRS black projects where the IRS actually violated local law to spy on foreign banks even going so far as to drug guards, steal the briefcases of banking executives, perform unwarranted searches, bribe foreign officials and all manner of nonsense to root out tax evaders which might also be U.S. citizens. For a long while there was a project which opened and Xeroxed all the incoming mail at JFK which appeared to originate from offshore havens. This wasn't in the 50's mind you, but the 80s. It was acts like these which prompted the Swiss to strengthen their banking secrecy during the Second World War. Just another day in the park in the U.S. Just recently this year Mexico nearly indicted several U.S. law officials for breaking Mexican law during the investigation of several Mexican banks. Clearly the practice hasn't abated much in the last 15 years.. (Note also that today all these methods (except for drugging guards maybe) have their legal equivalents in the United States, which is in itself a powerful statement). This continued for some time back when Ron was at the helm until the United States finally began to threaten to revoke the U.S. charters of certain banks it considered uncooperative. At this point a visitor, unannounced, flew into D.C. and literally dropped by the White House with no press coverage or fanfare at all in the late evening. That visitor was Margaret Thatcher and she proceeded to explain to Ron over the course of a few hours that if he kept it up many of the British Protectorates would literally have their economies crippled. Literally overnight the matter was dropped and the offshore centers left to quietly continue their business. So much for democratic countries with universal ideas about banking law, or the rule of "law and order" in banking regulation. This is but one example. So: Rule of Law - means little in the global-political scheme of things Democratic Countries Have Banking Laws - none of which are consistent or consistently applied Money Laundering is a Key Piece of Organized Crime - This begs a definition of Money Laundering. "Concealing the proceeds of a criminal act" sounds legitimate, but consider that it has been held to apply to a store clerk who sold food stamps for cash and deposited the proceeds in his personal (non-anonymous) checking account: Indicted in Federal Court for Money Laundering with a maximum possible term of 35 years. (This is a prosecutorial tactic to get a guilty plea to the basic theft charge). Consider also that third parties often take it on the chin with the wide definition currently applied. Case in point: Ma and Pa travel agency innocently accepts a deposit from notorious attorney of drug dealer. Their entire holding account is seized including the deposits of some 700 other potential travelers. After 7 years of fighting the seizure, the money is finally returned, without interest. (Effectively halfing the value of the funds). The business is ruined, its reputation in tatters. Ma and Pa fight it out in bankruptcy, lose their house, most of their retirement proceeds, etc. In the process this case sets the precedent that any amount of illicit funds ($1) deposited in any size account ($500 million) will render the entire account liable to seizure and permit it to be held in lieu of forfeiture hearings. That can go on for 7 years or so. Money which is "laundered" has its title literally revert to the U.S. Treasury. This means third parties who innocently accept these funds are liable for their return, even if they are passed on in the course of business. Beginning to seem silly? Money laundering is an invented offense. It's definition in the United States has grown so broad so as to be laughable, if not so frightening. Do not think that these are isolated incidents. So, money laundering in its commonly understood sense might be key to organized crime, but what passes for money laundering in the United States has little to do with it. Myth: Money Laundering laws have a serious impact on organized crime. This is increasingly nonsense. The United States spends close to $22,000.00 to seize $1.00 of illicit funds. Money Laundering today is extremely sophisticated and enforcement doesn't catch the drug dealers, it catches professional money launderers. Today if you are a drug lord you drop $30 million in cash with a professional launderer who cuts you a "clean" check for 85% of that figure or so on the spot and takes the risk of laundering the funds on his own. Myth: Money Laundering can be detected accurately and effectively and leads to drug and organized crime convictions. Nonsense. Assume for sake of argument that you could detect 99% of fraudulent transactions with the measures in place (entirely impossible) and that your false positive rate was only 1% (also entirely impossible). SWIFT alone processes $2 trillion per day. That's on the order of $600 trillion per year, just in SWIFT. (Add another $1.3 billion for CHIPS and $989 million for Fedwire daily. Oh, don't forget the foreign exchange markets, oh and NYSE, oh and NASDAQ, oh and international letters of credit, oh and...) The most sinister estimates of the global criminal economy (primarily drug money) run around $400 billion per year. Your false positives will identify $6 trillion in naughty funds that are actually pure just in SWIFT. Your correct hits will identify $396 billion in naughty funds in all systems worldwide. In this example you will have 15 times as many false hits as correct hits ignoring the lionshare of world financial systems. This is under the very best of circumstances. It's a losing game.. It's a game only the mathematically challenged or politically motivated will play. In fact, money laundering is a tack on offense that is brought to bear after an arrest on other charges has been made. The number of cases that originate with a money laundering investigation is vanishingly small. The payment system today eats up over 1.5% of the GNP primarily because of nonsense regulations like CTR's and other transaction reporting requirements which can cost up to $15 per transaction and (as we see above) have little if any effect on professional money laundering. Given these numbers the degree of "fraud" in the world financial system is far better than in the credit card system, which has pretty much reached equilibrium. (Fraud accounts for about 5% of credit card costs. Customer service accounts for about 15%). > There is a certain logic in the notion of having a legislative > process and laws. Our laws in the U.S. weren't written by > angels up in heaven, but they are better than some other places. In the case of money laundering regulation I should say almost _no_ other places. > If DBS participants advocate that money laundering laws are > not to be followed, I'm sorry but YOU GUYS have the burden > of logically arguing your position. So shut up and quit > raggin' on *me* about it. I would just like to see them applied with rationality. It's fairly clear that that's too much to ask of the United States. Interestingly enough it's typically multi-party systems of government that have a balanced approach to money laundering. Perhaps this is because grandstanding with things like "the war on drugs" isn't as effective outside of a two party system. Sheds new light on your comment about democracies and banking regulations. Some jurisdictions get along quite well without the nonsense perpetrated in the United States. Like Switzerland. Switzerland has one of the nicest things in a cash economy I have seen. A freely circulated 1000CHF note. It's worth about $750. (The United States phased out $500 bills long ago to deal with laundering). In Switzerland you can drop a 1000CHF note at a restaurant and no one bats an eye. In the U.S. you cant take a cab home from the International Terminal unless you have something smaller than a $50. Somehow Switzerland has manage to survive without looting in the streets and rampant crime. Luxembourg is in a similar situation. I tried to purchase a car some years ago outside of D.C. with cash. Completely legitimate transaction. No interest nonsense for me to worry about. No waiting for the car while the check clears. Simple. Right? The dealership called the police, convinced they were striking a blow against drug dealers. It's really gone too far. > 2. Practicality. Without at least a fig leaf of cooperation > with banking authorities and other police, DBS will not be > permitted. Transactions denominated in DBS won't be enforceable > in courts, and fraud won't be a crime. Reporting fraud in DBS > deal would be like reporting a fraud in purchase of heroin. Practicality? Of course any student of political science will understand that where government enforcement of contracts fails or falls short, organized crime tends to move in. Reporting fraud in the purchase of heroin to the right enforcement cartel tends to be much more effective in rendering results than U.S. courts I'd wager. Clearly, the United States would not benefit by forcing DBS underground. Several jurisdictions will permit DBS and enforce it. (I'm involved in the legislative process for one such law in a European jurisdiction now). If you believe that DBS should be outlawed then you must agree that cash should be outlawed. There is effectively no difference but velocity. > The principal reason for failure of electronic money, other > than cards used in physical establishments, is you can't trust > the seller to send you the goods. That's why everybody is > using credit cards, and bearing the 2-3% charge for "insurance". > > You guys seem to think untraceable DBS will be accepted, if > only a good enough encryption algorithm can be found???? 1% of the GNP. Instant 1% growth for changing a system of clearing. Think about that for awhile. > I think your ideas have a fatal, logical weakness. Without > any practical means to verify who got your money, or even > a legal *right* to enforce a contract, what good is dbs? > It's not even money. It's more like a coupon or something. What you are missing is that all your arguments apply equally to cash. Why is cash used if this is so? Prove to me that you just gave me six $100 bills. You are, "without any practical means to verify who got your money or even a legal *right* to enforce a contract" if the transaction is larger than $500. If only we could be rid of this pesky cash would could eliminate organized crime forever. --- end forwarded text ----------------- Robert A. Hettinga <mailto: rah(a)philodox.com> Philodox Financial Technology Evangelism <http://www.philodox.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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usubscribe
by Ixion 17 Dec '03

17 Dec '03

usubscribe Life is a dream

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USPS "Know Your Customer" Draws Fire
by Eric Cordian 17 Dec '03

17 Dec '03

Privacy advocates are beginning to take notice of the implications of the new Postal Service regulations concerning private mailboxes. ----- SACRAMENTO -- New postal regulations will make private mailboxes "private" no more, may endanger individual safety, and represent another government attack on privacy that should not be tolerated, the Libertarian Party of California announced today. "Why must government continue to erode individual privacy?" asked Libertarian state chair Mark Hinkle. "What's next? Eliminating unlisted phone numbers? Criminalizing the use of pseudonyms?" Under the new rules, published in the March 25th Federal Register, private mailbox customers will now be required to show two forms of ID -- including one with a photo -- when applying to rent, and mail delivered to private mailboxes must bear a new address designation, "PMB," or risk being undelivered. The rules went into effect April 26th. According to the Postal Service, the new rules are designed to combat mail fraud. But that sounds eerily like another recent government proposal, Hinkle noted. "It's 'Know Your Customer' all over again. The government just keeps wanting to invade our privacy." "Know Your Customer" was the name given to proposed government regulations that would have required banks to develop profiles on every customer and report suspicious banking activity to the government. Thanks to a campaign led by the Libertarian Party, the Federal Deposit Insurance Corporation rescinded the proposed rules in March. But the similarities remain: * The postal regulations will increase the burden on "Commercial Mail Receiving Agencies" -- or CMRAs as private mailbox businesses like Mailboxes Etc. are known -- by making them responsible for verifying the customer's identity. "Mailbox companies have an interest in reducing fraud but not in inconveniencing customers," said Hinkle. "Their employees should not have to act as deputies for the Postal Service." * The rules will eliminate the privacy enjoyed by CMRA customers -- and may endanger some of them. "Private mailbox renters often have very good reasons for keeping a low profile, such as battered spouses in hiding, celebrities, and law enforcement officers who want to keep their home addresses confidential," Hinkle pointed out. "The Postal Service is literally endangering these individuals." Small businesses started in a home or a garage may rent a private box to give the appearance of having a physical office. "Thanks to the PMB designation, all that privacy is now gone and those businesses will probably suffer as a result," said Hinkle. Even worse, anyone -- not just the police -- can request to see a customer's application information if that customer is doing or soliciting business from their private mailbox. * Most troubling, the regulations operate under the assumption that the customer is guilty until proven innocent. "Just like with 'Know Your Customer,' the Postal Service is depriving the many of their liberties for the sake of a very small few lawbreakers. The problem is, criminals do not follow the law and will find ways around these rules while law-abiding customers are forced to sacrifice their privacy," charged Hinkle. There's one crucial difference between "Know Your Customer" and the new postal regulations: whereas "Know Your Customer" was a proposed rule, the Postal Service has already adopted the new rules, having first proposed them in August, 1997. "With 8,645 regulations adopted in the last two years, it's easy to see how this one slipped through the cracks," Hinkle concluded. "Libertarians denounce the new postal regulations and call on Congress to recognize the erosion of American privacy -- and to stop it before privacy goes the way of the Pony Express." -- Eric Michael Cordian 0+ O:.T:.O:. Mathematical Munitions Division "Do What Thou Wilt Shall Be The Whole Of The Law"

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baby carrier
by chungdoo 17 Dec '03

17 Dec '03

We are pleased to take this opportunity to introduce ourselves as one of the leading manufacturers-exporters of high grade Baby walker, Baby carrier, Baby swing, Mickey Basketball and Accesorries with beautiful shape in Korea. We hope the articles will be just what you want for outstanding ones compared with the competitors' in quality and design as well. Our baby products has the outstanding points as follows: * Baby walker - Spring Cushion Type * Baby carrier - Comfortable, safe and ligh frame - Padded headrest and Shoulder straps - Adjustable inner seat - Large removable storage bag for baby supplies - Padded waist belt * family carrier - Ages 6 months to 2 years - Frame : Aluminum - Fabric : Nylon - Weight : 1200 g/PC - Double seats for baby and child * simple carrier - Ages 6 months to 3 years - Fabric : Nylon - Support baby with your arms - Simple fuction, simple carrying - Pouch for storage - See through vinyl package * 3+ SWING Our toys are tested to company the requirement of European Standard (Safety of Toys). This high quality product is on all age swing. If has different size settings, depending on the size of your child you can fit the back into either inside (smaller)or(larger)setting. Back Support and front restraint shield are removable. So if can be converted into three swings(infant Swing, Chair Swign and Seat swing) suitable for children 6 months up to 12 years old. * DO RE MI SWING * SEVEN MICKEY - A Mini Basketball Set - Non Toxic PVC Ball * TEN MICKEY * FIFTEEN MICKEY * Accesorries * Feeding echievements * Baby Gift Set To see the design, pls visit our web site, http://www.chungdoo.co.kr and do not hesitate to send your requirements so that we may show you our best service. We are looking forward to hearing a good news from you soon. Faithfully yours, K. J. Kang, President Chung Doo Corporation Tel : (82-2) 565-3115, 565-3885 Fax : (82-2) 565-3110 e-mail : chungdoo(a)chungdoo.co.kr URL : http://www.chungdoo.co.kr

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No Subject
by Anonymous 17 Dec '03

17 Dec '03

xxxx is exactly right on this. Several years ago I posted to sci.crypt my "novel" idea for packing bits into the essentially inaudible "least significant bits" (LSBs) of digital recordings, such as DATs and CDs. Ditto for the LSBs in an 8-bit image or 24-bit color image. I've since seen this idea reinvented _several_ times on sci.crypt and elsewhere...and I'm willing to bet I wasn't the first, either (so I don't claim any credit). A 2-hour DAT contains about 10 Gbits (2 hours x 3600 sec/hr x 2 channels x 16 bits/sample x 44K samples/sec), or about 1.2 Gbytes. A CD contains about half this, i.e., about 700 Mbytes. The LSB of a DAT is 1/16th of the 1.2 Gbytes, or 80 Mbytes. This is a _lot_ of storage! A home-recorded DAT--and I use a Sony D-3 DAT Walkman to make tapes--has so much noise down at the LSB level--noise from the A/D and D/A converters, noise from the microphones (if any), etc.--that the bits are essentially random at this level. (This is a subtle, but important, point: a factory recorded DAT or CD will have predetermined bits at all levels, i.e., the authorities could in principle spot any modifications. But home-recorded, or dubbed, DATs will of course not be subject to this kind of analysis.) Some care might be taken to ensure that the statistical properties of the signal bits resemble what would be expected with "noise" bits, but this will be a minor hurdle. Adobe Photoshop can be used to easily place message bits in the "noise" that dominates things down at the LSB level. The resulting GIF can then be posted to UseNet or e-mailed. Ditto for sound samples, using the ideas I just described (but typically requiring sound sampling boards, etc.). I've done some experiments along these lines. This doesn't mean our problems are solved, of course. Exchanging tapes is cumbersome and vulnerable to stings. But it does help to point out the utter futility of trying to stop the flow of bits. --Tim -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)netcom.com | anonymous networks, digital pseudonyms, zero 408-688-5409 | knowledge, reputations, information markets, W.A.S.T.E.: Aptos, CA | black markets, collapse of governments. Higher Power: 2^756839 | PGP 2.0 and MailSafe keys by arrangement.

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Revealing identities
by Anonymous 17 Dec '03

17 Dec '03

Johan, I haven't been paying close attention to the latest on the anonymity debate, so please tell me if the following has been raised before. In your message <9302260807.aa01498(a)penet.penet.FI> of Fri, 26 Feb 93 08:50:19 +0200 on the subject "Moral dilemma." to the cypherpunks list, you mentioned that >One rule is >that I *never* reveal the true identity of an anon user, While I believe that you should be able to use any policy you want for this sort of thing, I do not believe that both your server and this policy can survive together. Because you/the-server cannot censor the content of anonymous postings/mail (you lack the time, and knowledge of what is legal in every corner of the world), you can only withdraw someone's anonymous posting permission in response to complaints to something that they have already posted. I believe that eventually, someone will post something so damaging/incensing that sufficient pressure will be applied that either: the service cannot continue (e.g. disconnected from the network), or you will be forced to reveal or destroy the mappings between alias(es) and user(s). For example, on the cypherpunks list, the question of what would happen if someone claiming responsibility for the New York bombing posted through the anonymous server. Bodies in the US (from people providing parts of the Internet service through to political and criminal bodies such as the FBI/CIA/NSA) could easily apply very strong pressure. Unfortunately, I feel that this pressure will come sooner rather than later because there is nothing preventing people opposed to the anonymous service from making these postings merely to discredit your service. I think that there *MAY* be a way around this. I assume the reasons behind your non-disclosure policy are: i. You cannot decide which identities should be revealed. ii. Revealing an identity removes their anonymity from all of their previous postings, some of which may have had reason to be anonymous. For example, I think it "unjust" to reveal what someone wrote to alt.sex.abuse because they violated copyright or whatever in some other group. The second of these reasons could be avoided by permitting anonymous users to have a different alias for each posting that they make. This would increase the loading on the alias space and records of alias<->ID mappings. I can see no reason why you would need to reveal all of the aliases of one real identity. The decision of when an identity should be revealed could be left to a jury: If you receive a reasonable complaint about a posting (not just a flame, but something more significant such as copyright violation, libel, etc) then you would post this complaint to a group of anonymous jurors who decide on what action should be taken. The plaintiff and defendant could even argue their positions to the jury, and might advertise on a newsgroup asking for assistance from relevant groups (e.g. pro/anti-anonymity groups). The problem now is how to select the jury. Some factors are: i. The number of jurors influences the probability that the decision can be swayed because of the random composition of the jury. So one juror would be too few, 12 as used in orthodox courts might be reasonable, etc. ii. Jurors would not want to spend too much time on the case, so there should be an upper limit on the number of bytes transmitted by defendant and plaintiff, and the time span of the case. iii. The degree of "consensus" required for a decision. Perhaps 2/3 majority is OK, perhaps 75%. The larger the majority required, the less likely that the case will be swayed by the composition of the jury, but also the longer it would take to reach the decision. iv. The jury can't be composed just of users of the anonymous service because of their bias. Perhaps jurors could be selected at random from the names of people who have posted to the news in the past? v. Jurors would have to accept their position -- there's no use in having a juror who doesn't read the information passed to him/her. I feel that the problem of selecting a jury would be easier to solve than that of defending the anonymous service against the uproar that may result from some postings. With this judicial process, anonymous users would also be accountable for what they post. Some other issues would be i. What happens if the jury can't decide? ii. What sort of "punishment" is possible? Warning the person? Barring the person from anonymous posting? Revealing their identity to the necessary body? etc The idea is *VERY* rough at the moment, but perhaps it has some merit? As I see it, the good part for the anonymous service provider is that they do not have to participate in the process (apart from filtering trivial flaming cases from the judicial system), which will avoid claims of bias and lessens your already considerable load. Comments? Tim ---- 8< Cut Here 8< ---- Tim Moors __________________________________________________________ Australian Telecommunications Research Institute .-_!\ GPO Box U 1987 Email: tim(a)atri.curtin.edu.au / \ Perth, WA 6001 Phone: +61 9 351 3243 \_.-._/ Australia Fax: +61 9 351 3244 o "beLIEve" -- U2 Zoo TV Tour

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No Subject
by Martin Hellman 17 Dec '03

17 Dec '03

Subject: Clipper Chip Most of you have seen the announcement in Friday's NY Times, etc. about NIST (National Institute of Standards & Technology) announcing the "Clipper Chip" crypto device. Several messges on the net have asked for more technical details, and some have been laboring under understandable misunderstandings given the lack of details in the news articles. So here to help out is your friendly NSA link: me. I was somewhat surprised Friday to get a call from the Agency which supplied many of the missing details. I was told the info was public, so here it is (the cc of this to Dennis Branstad at NIST is mostly as a double check on my facts since I assume he is aware of all this; please let me know if I have anything wrong): The Clipper Chip will have a secret crypto algorithm embedded in Silicon. Each chip will have two secret, 80-bit keys. One will be the same for all chips (ie a system-wide key) and the other will be unit specific. I don't know what NIST and NSA will call them, but I will call them the system key SK and unit key UK in this message. The IC will be designed to be extremely difficult to reverse so that the system key can be kept secret. (Aside: It is clear that they also want to keep the algorithm secret and, in my opinion, it may be as much for that as this stated purpose.) The unit key will be generated as the XOR of two 80-bit random numbers K1 and K2 (UK=K1+K2) which will be kept by the two escrow authorities. Who these escrow authorities will be is still to be decided by the Attorney General, but it was stressed to me that they will NOT be NSA or law enforcement agencies, that they must be parties acceptable to the users of the system as unbiased. When a law enforcement agency gets a court order, they will present it to these two escrow authorities and receive K1 and K2, thereby allowing access to the unit key UK. In addition to the system key, each user will get to choose his or her own key and change it as often as desired. Call this key plain old K. When a message is to be sent it will first be encrypted under K, then K will be encrypted under the unit key UK, and the serial number of the unit added to produce a three part message which will then be encrypted under the system key SK producing E{ E[M; K], E[K; UK], serial number; SK} When a court order obtains K1 and K2, and thence K, the law enforcement agency will use SK to decrypt all information flowing on the suspected link [Aside: It is my guess that they may do this constantly on all links, with or without a court order, since it is almost impossible to tell which links over which a message will flow.] This gives the agency access to E[M; K], E[K; UK], serial number in the above message. They then check the serial number of the unit and see if it is on the "watch list" for which they have a court order. If so, they will decrypt E[K; UK] to obtain K, and then decrypt E[M; K] to obtain M. I am still in the process of assessing this scheme, so please do not take the above as any kind of endorsement of the proposed scheme. All I am trying to do is help all of us assess the scheme more knowledgably. But I will say that the need for just one court order worries me. I would feel more comfortable (though not necessarily comfortable!) if two separate court orders were needed, one per escrow authority. While no explanation is needed, the following story adds some color: In researching some ideas that Silvio Micali and I have been kicking around, I spoke with Gerald Gunther, the constitutional law expert here at Stanford and he related the following story: When Edward Levi became Pres. Ford's attorney general (right after Watergate), he was visited by an FBI agent asking for "the wiretap authorizations." When Levy asked for the details so he could review the cases as required by law, the agent told him that his predecessors just turned over 40-50 blank, signed forms every time. Levi did not comply and changed the system, but the lesson is clear: No single person or authority should have the power to authorize wiretaps (or worse yet, divulging of personal keys). Sometimes he or she will be an Edward Levi and sometimes a John Mitchell. Martin Hellman ======== And, his permission to repost. PLEASE NOTE HIS "RESTRICTION." --jim =======

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Re: Marty's 4/17 Clipper Chip post-to-many ...
by Martin Hellman 17 Dec '03

17 Dec '03

Jim, It is fine to post my previous message to cypherpunks if you also post this message with it in which: I ask recipients to be very sparse in their requesting further info from me or asking for comments on specific questions. By this posting I apologize for any messages I am unable to respond to. (I already spend too much time answering too much e-mail and am particularly overloaded this week with other responsibilities.) martin ========= Finally, there has been a significant reponse to this by a cryptoid well-known to all of us. Am seeking permission to repost it, also. --jim Incidentally, Marty sez he had no forewarning that Clipper was about to sail. The NY Times article blind-sided him about 11:30 Thursday night. Sounds like the government is really doing an outstanding job of careful, collaborative policy-making. [Danger! Novice gunslinger is shooting from the hip!] --jim

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Re: Clipper Chip
by denning＠cs.cosc.georgetown.edu 17 Dec '03

17 Dec '03

I just had another conversation with NSA to clarify some of the features of Clipper. Please feel free to distribute this and my other messages on Clipper. The name of the encryption algorithm is "Skipjack." Martin Hellman had written and the serial number of the unit added to produce a three part message which will then be encrypted under the system key SK producing E{ E[M; K], E[K; UK], serial number; SK} To which I responded: My understanding is that E[M; K] is not encrypted under SK (called the "family key") and that the decrypt key corresponding to SK is held by law enforcement. Does anyone have first hand knowledge on this? I was correct in that E[M; K] is not encrypted under SK. However, Skipjack being a single-key system, there is, of course, not a separate decrypt key for the family key SK. The unit key, also called the "chip key," is generated from the serial number N as follows. Let N1, N2, and N3 be 64 bit blocks derived from N, and let S1 and S2 be two 80-bit seeds used as keys. Compute the 64-bit block R1 = E[D[E[N1; S1]; S2]; S1] (Note that this is like using the DES in triple encryption mode with two keys.) Similarly compute blocks R2 and R3 starting with N2 and N3. (I'm unlear about whether the keys S1 and S2 change. The fact that they're called seeds suggests they might.) Then R1, R2, and R3 are concatenated together giving 192 bits. The first 80 bits form K1 and the next 80 bits form K2. The remaining bits are discarded. The seeds S1 and S2 do not change. The whole process is performed on a laptop computer, and S1 and S2 are supplied by two independent people so that no one person knows both. The same S1 and S2 are used during an entire "programming session" to generate keys for a stream of serial numbers. Everything is discarded at the end (the computer could be thrown out if desired). The serial number is 30 bits and the values N1, N2, and N3 are formed by padding the serial number with fixed 34-bit blocks (separate padding for each value). The resulting keys K1 and K2 are output onto separate floppy disks, paired up with their serial number. Each pair is stored in a separate file. The floppy disks are taken away by two separate people on behalf of the two escrow agencies. Dorothy Denning denning(a)cs.georgetown.edu ====== >From eff.org!interesting-people-request(a)netcomsv.netcom.com Mon Apr 19 20:07:50 1993 Posted-Date: Mon, 19 Apr 1993 21:17:27 -0500 From: David Farber <farber(a)central.cis.upenn.edu> X-Sender: farber(a)linc.cis.upenn.edu Subject: More technical details -- Chipper To: interesting-people(a)eff.org (interesting-people mailing list) Personal note. Denning suggests such firms as " SRI, Rand, Mitre, the national labs (Sandia, LANL, Los Alamos), Treasury, GAO" as possible escrow organizations. I personally believe that firms which get their funding from the government are just too susceptible to pressure which we have seen historically. It would be best to use organizations that have a more arms length relationship with the government so everyone believes the escrows task is being performed properly. Dave From: smb(a)research.att.com (Steven Bellovin) Subject: More technical details Date: 19 Apr 93 13:43:46 GMT Here are some corrections and additions to Hellman's note, courtesy of Dorothy Denning. Again, this is reposted with permission. Two requests -- first, note the roles of S1 and S2. It appears to me and others that anyone who knows those values can construct the unit key. And the nature of the generation process for K1 and K2 is such that neither can be produced alone. Thus, the scheme cannot be implemented such that one repository generates the first half-key, and another generates the second. *That* is ominous. Second -- these postings are not revealed scripture, nor are they carefully-crafted spook postings. Don't attempt to draw out hidden meanings (as opposed to, say, the official announcements of Clipper). Leave Denning out of this; given Hellman's record of opposition to DES, which goes back before some folks on this newsgroup knew how to read, I don't think you can impugn his integrity. Oh yeah -- the folks who invented Clipper aren't stupid. If you think something doesn't make sense, it's almost certainly because you don't understand their goals. --Steve Bellovin ----- Date: Sun, 18 Apr 93 07:56:39 EDT From: denning(a)cs.georgetown.edu (Dorothy Denning) Subject: Re: Clipper Chip To: (a long list of folks) I was also briefed by the NSA and FBI, so let me add a few comments to Marty's message: The Clipper Chip will have a secret crypto algorithm embedded in The algorithm operates on 64-bit blocks (like DES) and the chip supports all 4 DES modes of operation. The algorithm uses 32 rounds of scrambling compared with 16 in DES. In addition to the system key, each user will get to choose his or her own key and change it as often as desired. Call this key plain old K. When a message is to be sent it will first be K is the session key shared by the sender and receiver. Any method (e.g., public key) can be used to establish the session key. In the AT&T telephone security devices, which will have the new chip, the key is negotiated using a public-key protocol. encrypted under K, then K will be encrypted under the unit key UK, and the serial number of the unit added to produce a three part message which will then be encrypted under the system key SK producing E{ E[M; K], E[K; UK], serial number; SK} My understanding is that E[M; K] is not encrypted under SK (called the "family key") and that the decrypt key corresponding to SK is held by law enforcement. Does anyone have first hand knowledge on this? I will also check it out, but this is 7am Sunday so I did not want to wait. The unit key will be generated as the XOR of two 80-bit random numbers K1 and K2 (UK=K1+K2) which will be kept by the two escrow The unit key, also called the "chip key," is generated from the serial number N as follows. Let N1, N2, and N3 be 64 bit blocks derived from N, and let S1 and S2 be two 80-bit seeds used as keys. Compute the 64-bit block R1 = E[D[E[N1; S1]; S2]; S1] (Note that this is like using the DES in triple encryption mode with two keys.) Similarly compute blocks R2 and R3 starting with N2 and N3. (I'm unlear about whether the keys S1 and S2 change. The fact that they're called seeds suggests they might.) Then R1, R2, and R3 are concatenated together giving 192 bits. The first 80 bits form K1 and the next 80 bits form K2. The remaining bits are discarded. authorities. Who these escrow authorities will be is still to be decided by the Attorney General, but it was stressed to me that they will NOT be NSA or law enforcement agencies, that they must be parties acceptable to the users of the system as unbiased. Marty is right on this and the FBI has asked me for suggestions. Please pass them to me along with your reasons. In addition to Marty's criteria, I would add that the agencies must have an established record of being able to safeguard highly sensitive information. Some suggestions I've received so far include SRI, Rand, Mitre, the national labs (Sandia, LANL, Los Alamos), Treasury, GAO. When a court order obtains K1 and K2, and thence K, the law enforcement agency will use SK to decrypt all information flowing on the suspected link [Aside: It is my guess that they may do this constantly on all links, with or without a court order, since it is almost impossible to tell which links over which a message will flow.] My understanding is that there will be only one decode box and that it will be operated by the FBI. The service provider will isolate the communications stream and pass it to the FBI where it will pass through the decode box, which will have been keyed with K. for "the wiretap authorizations." When Levy asked for the details so he could review the cases as required by law, the agent told him that his predecessors just turned over 40-50 blank, signed forms every time. Levi did not comply and changed the system, but the lesson is clear: No single person or authority should have the power to authorize wiretaps No single person does, at least for FBI taps. After completing a mound of paperwork, an agent must get the approval of several people on a chain that includes FBI legal counsel before the request is even taken to the Attorney General for final approval. Dorothy Denning

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Re: Marty's 4/17 Clipper Chip post-to-many & Dorothy's 4/8 response
by denning＠cs.georgetown.edu 17 Dec '03

17 Dec '03

Fine with me. Post anywhere. Dorothy =====

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No Subject
by Anonymous 17 Dec '03

17 Dec '03

Based on previous experience, a couple more will appear overnight. Hal Finney hfinney(a)shell.portal.com

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on line books (not just in risk mgmt)
by Tapen Sinha 17 Dec '03

17 Dec '03

If you are looking for information on new books, how to buy them (on line!) and review of these books, there is a neat way to do it on internet: telnet books.com if the above does not work on your machine, try telnet 192.148.240.9 It will ask you a bunch of questions (like your name and address) and then you can look at info on books by author, subject... You can look at reviews of those books too. You can order books by email even (have your credit card handy)! It can be quite useful. A word of caution: there are some unhappy users out there who claim that they got billed for books they did not order. tapen_sinha(a)macmail.bond.edu.au

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No Subject
by Anonymous 17 Dec '03

17 Dec '03

Yes, I remember that now. My interpretation, though, was that with the bank's help you could tell when a coin had been re-used. This could impair the anonymity of the cash. Generally in the analysis of these proto- cols one wants anonymity even if the bank and the other participants collude. That is the whole point of cryptographic (non-transferable) cash, after all; otherwise the bank could just use the "Poor Man's Cash" idea which Tim May suggested here last year and just issue cash in the form of magic numbers with no blinding or digital sigs. Hal

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No Subject
by Anonymous 17 Dec '03

17 Dec '03

I read this paper some time ago. Couldn't the cash still be detected as having belonged to the original owner even after you have transferred it? If so, then the other requirement is that you must transfer it anonymously, otherwise they can still get back to you. An example would be if you are doing something which the government doesn't like, such as shipping tracts advocating egalitarianism to a country with explicitly racist policies. The government might be able to put pressure on some members of the organization and use this (in effect) "marked money" to find the others. If you pass the money on to someone else, but they know it came from you, and then the government comes to them, determines that this is "dirty money" (which was given to the threatening egalitarians) they can say "who did you get this from" and your jig is up. Hal

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No Subject
by mkj＠world.std.com 17 Dec '03

17 Dec '03

Has anyone here seen the so-called Lehman Panel report? It is available by ftp from ftp.uspto.gov, in the directory /pub/nii-ip. It is offered there in several formats. The deadline for comments is September 7th. (Sorry about the short notice, but I've only just recently discovered the report myself.) The Lehman Panel is more officially known as the "Working Group on Intellectual Property Rights", a subcommittee of President Clinton's "Information Infrastructure Task Force". The Lehman Panel report makes a number of recommendations concerning changes to current intellectual property law, in light of challenges presented by the National Information Infrastructure (NII) project. This appears to me to be quite an important report, which could play a major role in shaping vital aspects of our near-future society. I find the whole approach taken by the panel disturbing, though perhaps not surprising. Very briefly, my general concerns are these: There appears to be a natural tension between current intellectual property law and the widespread deployment of computer networking. (John Barlow has put it more simply: "Copyright is dead".) The Lehman panel's report, rather than trying to accomodate and adapt to the inevitable effects of the NII, instead recommends tightening up existing laws, and expanding their scope, in an attempt to preserve the status quo and protect established interests. It seems to me that this approach would dramatically undercut the potential of the NII, making many of its most natural uses and benefits illegal. Worse, I believe this approach would create a body of law which will make speed limits look well-respected by comparison, and any attempt to enforce these laws is likely to be destructive and unpleasant for all of us. There are numerous other, more specific things in this report which make me unhappy, too -- such as the presumption that the NII should be little more than a new marketplace for old businesses; the creation of gratuitous new rights for major record labels which would hurt artists, and would enable the record companies to control the digital audio server industry; and most frightening of all, the shameless suggestion that the public schools should be used to pound these new rules into the heads of children as early as Kindergarten. I've obviously considered firing off a letter of comment myself, but after I calmed down I realized how little impact that would be likely to have. So I decided the most constructive thing I could do would be to post this "alert" here, in the hope that someone with better qualifications and resources than myself might pick up the ball. Thanks for your attention. --- mkj

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