http://arstechnica.com/tech-policy/news/2012/03/sealand-and-havenco.ars/1 Death of a data haven: cypherpunks, WikiLeaks, and the world's smallest nation By James Grimmelmann | Published March 27, 2012 8:00 PM Sealand in all its rusty splendor A few weeks ago, Fox News breathlessly reported that the embattled WikiLeaks operation was looking to start a new life under on the sea. WikiLeaks, the article speculated, might try to escape its legal troubles by putting its servers on Sealand, a World War II anti-aircraft platform seven miles off the English coast in the North Sea, a place that calls itself an independent nation. It sounds perfect for WikiLeaks: a friendly, legally unassailable host with an anything-goes attitude. But readers with a memory of the early 2000s might be wondering, "Didn't someone already try this? How did that work out?" Good questions. From 2000 to 2008, a company called HavenCo did indeed offer no-questions-asked colocation on Sealandband it didn't end well. HavenCo's failureband make no mistake about it, HavenCo did failbshows how hard it is to get out from under government's thumb. HavenCo built it, but no one came. For a host of reasons, ranging from its physical vulnerability to the fact that The Man doesn't care where you store your data if he can get his hands on you, Sealand was never able to offer the kind of immunity from law that digital rebels sought. And, paradoxically, by seeking to avoid government, HavenCo made itself exquisitely vulnerable to one government in particular: Sealand's. It found that out the hard way in 2003 when Sealand "nationalized" the company. For the last two years, I've researched the history of Sealand and HavenCo. I used the Wayback Machine to reconstruct long-since-vanished webpages. I dug through microfilm of newspapers back to the 1960s. I pored over thousands of pages of documents, only recently unsealed, from the United Kingdom's National Archives. My findings have just been published in a new 80-page article in the University of Illinois Law Review, one called "Sealand, HavenCo, and the Rule of Law" (PDF). It tells the fullband very weirdbstory of how this micronation happened to be in the right place (the North Sea) at the right time (the late 1990s) to provide some cypherpunk entrepreneurs with the most impractical data center ever built. Here, I'll give the condensed version of the tale, hitting the important points in HavenCo's history and explaining what went wrong. Cryptographers in paradise The story starts on the Caribbean island of Anguilla, at the 1998 Financial Cryptography conference. The conference, dedicated to building secure online payment systems, drew hackers who believed in better living through crypto. One of them was an expatriate American, Sean Hastings, a cynical but cheerful libertarian with a healthy suspicion of any and all forms of authority. (His website sports the chipper slogan "Keep Calm and Carry" and features his PDF book God Wants You Dead.) The freedom-minded Hastings had moved to Anguilla to work on online gambling projects and explore the idea of starting a data haven. A Sealand/HavenCo timeline 1942: Roughs Tower constructed off the coast of East Anglia. 1948: Roughs Tower abandoned by English government following World War II. 1966: Pirate radio entrepreneur Roy Bates occupies Roughs Tower. 1967: Bates declares an independent Principality of Sealand. 1968: Bates acquitted of British firearms charges, causing Britain to adopt policy of leaving him alone. 1978: German-led coup takes control of Sealand on August 10; Roy Bates retakes Sealand in dawn helicopter raid on August 15. 1987: Britain extends territorial waters to 12 miles, encompassing Sealand. Sealand claims its own 12-mile territorial waters. 1999: Sean Hastings and Ryan Lackey conceive of idea for HavenCo. 2000: HavenCo launches to massive press hoopla. 2002: HavenCo taken over by Sealand after commercial failure and mounting tensions. 2006: Sealand badly damaged in generator fire. 2008: HavenCo website goes offline. 2009: Sealand launches Twitter account. A data haven is "the information equivalent to a tax haven," a country that helps you evade other countries' rules on what you can and can't do with your bits. (Think "Swiss banking" for data.) The best-known example comes from Neal Stephenson's 1999 best-seller Cryptonomicon, whose heroes go up against murderous warlords, rapacious venture capitalists, and epic authorial digressions in their quest to bring untraceable communications to the masses and get rich in the process. The idea, and the term, come out of 1970s and 1980s debates over whether companies could get around pesky privacy protections by shipping their magnetic tape reels to a country with laxer privacy laws. What started off as a pejorative term flipped to a positive in the eyes of the cypherpunks. They saw governmental restrictions on the free flow of informationbprivacy, copyright, sedition, drug-making instructions, or whateverbas grave threats to personal freedom. Cypherpunks hoped a borderless Internet, together with strong cryptography and a friendly data haven or two for their servers, would destroy the government's ability to snoop on and censor online speech. It would all lead to a new age of genuine liberty. Hastings was a true believer. On Anguilla, he founded a data haven company named IsleByte and worked on open-source electronic currency software. But he was getting increasingly frustrated with Anguilla. He expected a "libertarian mecca," but the actual Anguilla sharply restricted both gambling and pornography. Worse, he was finding Anguilla's legal system frustrating to deal with, something between a bureaucratic nightmare and a straight-up shakedown. At the Financial Cryptography conference, Hastings amused and fascinated the other attendees with a data haven variant soon dubbed the "Toxic Barge Project". The idea was to buy a ship, fill the top of the hold with computer severs and the bottom with the nastiest toxic waste imaginable, then plant yourself in international waters near a major port and start offering co-location services. As Hastings explained, the toxic waste "forces the large military power to protect you from outside threats, while being very hesitant to attempt to board your vessel." The barge idea went nowhere, but it marked Hastings as the go-to guy for out-of-the-box data haven schemes. After Hastings moved back to the United States, one of the other conference attendees, a gregarious and energetic MIT dropout named Ryan Lackey, crashed with him in early 1999. Lackey had his own geek and libertarian cred, along with a sense of adventure that would later take him to Iraq to perform IT work during the American occupation. The two men started thinking seriously about where to place an actual, practical data haven. They looked at several Pacific islands and even contemplated building their own artificial island on the Cortes Bank, a hundred miles out into the Pacific from San Diego. But then, flipping through Erwin Strauss's cult classic How to Start Your Own Country, they found Sealand. Strauss described it as the most successful micronation of all timeband it looked like a perfect fit for their project. Helicopter approach to Sealand Ryan Lackey Photograph by Ryan Lackey The Principality of Sealand "Sealand" is a 120-foot by 50-foot deck on a pair of hollow concrete legs. It stands proudly a few dozen feet off the waves in the North Sea, seven miles off the English coast. It was built during World War II to provide antiaircraft defense for the Thames Estuary and given the name "Roughs Tower." The platform and legs were mounted on a pontoon, which was towed into place, then flooded to create a stable base on the seabed. After the war, Roughs Tower sat empty until the pirate radio bubble of the 1960s. Entrepreneurs trying to get around the BBC's broadcasting monopoly took to ships and offshore forts, setting up primitive radio stations staffed by adventuresome young music lovers who didn't mind bad food and harsh conditions. One such station, Radio Essex, was run by one of world's great lovable rogues, Roy Bates. As one of his DJs, David Sinclair, would later put it, "Roy was a throwback. He should have been born in the time of the first Queen Elizabeth and sailed with Drake. ... [H]e was the kind of man who had creditors everywhere, but it never seemed to bother him." Bates first set up shop on Knock John, one of Roughs Tower's sister platforms, by evicting the staff of another pirate station already onsite. But Knock John was inside the three-mile limit of English territorial waters, and the government successfully prosecuted Bates for unlicensed broadcasting in the fall of 1966. Unfazed, Bates packed up his equipment and moved out to Roughs Tower on Christmas Day 1966. That it was already occupied by employees of Radio Caroline didn't slow him down. Roy Bates's crew, Sinclair explained, "had earnt a fearsome reputation for skulduggery, as 'the hard bastards of the North Sea.'" They intimidated Radio Caroline into leaving. Unfortunately, the penny-pinching Bates left his men alone on Roughs Tower with only three days worth of foodbthey lasted 17 days before calling a lifeboat to be evacuated. Radio Caroline moved back to the platform in April 1967, but foolishly entered into a joint operating agreement with Bates. Through a combination of subterfuge and force, Bates managed to replace all of the Caroline employees with his own men. He spent the next few months fighting off Radio Caroline boarding parties with an air rifle and petrol bombs. (The violence was hardly unusual: Adrian Johns's excellent Death of a Pirate tells the particularly memorable story of how one pirate broadcaster shot and killed another.) Sealand, just off the English coast from Harwich Google Maps A new broadcasting act, passed in the summer of 1967, put an end to Roughs Tower's usefulness as a pirate radio base by sharply cracking down on the landlubbing advertisers and suppliers who kept the offshore stations going. But Roy Bates had an even grander scheme by this point: running his own country. On September 2, 1967, he declared that Roughs Tower was now the independent Principality of Sealand, and he named himself Prince. If the British government had been worried about Roy Bates before, it was positively alarmed once he started hurling Molotov cocktails and calling himself Prince Roy. But every time the government came up with a scheme to oust him, Bates found a way to spin the story to make the bureaucrats look like bumbling bullies. He turned out to be a grandmaster of the preemptive press strike. Five stranger-than-fiction Sealand facts During the initial flooding, the pontoon filled unevenly with water, causing the tower to list 30 degrees to starboardbwith 100 crewmen aboard. The one ship to fly the Sealand flag was ultimately sold to MGM and blown up for a scene in the Tommy Lee Jones movie Blown Away.) After failing to seize control of Sealand in 1978, Alexander Achenbach set up a government-in-exile that dabbles in perpetual motion machines, UFOs, conspiracy theories, and revisionist history. A generator on Sealand caught fire in 2006, requiring an RAF rescue helicopter to airlift the lone crewmember on board to the British mainland for medical treatment. A shadowy Spanish crime ring produced thousands of "Sealand" passports in the late 1990s, including fake diplomatic credentials. Customs tried to deny Bates permission to take his leaky boat out of port, arguing that it was unseaworthy. Bates got the Times of London to run a story saying his children were "marooned" on Sealand, and Customs backed down. The government tried to buy him out, but Bates caught wind that a marine detachment was on standby to occupy the platform as soon as he left. "Commandos Set to Seize Fort," read the Times headline and the plan was dropped. Bates even appears to have run one of his employees as a double agent, tricking the Ministry of Defense into making an ill-considered offer to take over the fort if the employee took it from Bates. "Ministry Planned to Seize Sea Fort," read the headline in the Daily Telegraph. The government had to submit to the embarrassment of Parliamentary questioning over the incident. The government's last serious attempt to get rid of Bates involved bringing him up on firearms charges after his son Michael fired a pistol at a government vessel working on a nearby buoy. Bates was acquitted in October 1968 when the court ruled it lacked jurisdiction over firearms offenses committed on Roughs Tower. At this, the government gave up. An ad hoc committee in the Cabinet Office concluded: Mr. Bates' continued occupation of the Tower was undesirable, because of the shooting incident and the possibility of further violence, and also because of the small but continuing threat that the Tower could be used for some illegal activity not at present foreseen. Nevertheless, he was doing no actual harm, so far as was known, and the Ministry of Defense had no need of the Fort themselves. There were no pressing reasons for evicting Mr. Bates, certainly none that would justify the use of force or the passage of special legislation. The next 30 years in Sealand history are one improbable scheme after another. Stamps and coins quickly turned into grandiose plans for offshore banking and tourism. By the mid-1970s, Sealand's associates were passing around a brochure showing how Sealand would be built out to include a hotel, a golf course, a tanker port, and even an airport. In the late 1980s, Sealand served as a flag of convenience for an American pirate broadcaster who lasted three days off of Long Island before the FCC shut him down. The Bateses optioned their story to a screenwriter, and although Emma Watson was at one point allegedly attached to the project, nothing came of it. Even a 2008 Red Bull skateboarding video was filmed on Sealandbwatch for the board over the side at 2:49. If this all sounds rather two-bit, it was. Whether or not Roy Bates spent a million pounds on Sealand, as he sometimes claims, the "rusting heap of junk" was no Monaco. For most of its history, Sealand has been the world's most impractical vacation home. The Bateses visit regularly and keep the place manned at all times, but they live ashore. HavenCo remains Sealand's one true brush with real money and real fame. Rigid inflatable boat used to ferry people and supplies to Sealand Ryan Lackey The initial satellite Internet connection on Sealand Ryan Lackey The founding of HavenCo Sealand was an inspired choice for the data haven project. Roy Bates's son, Michael, was running Sealand on a day-to-day basis as the Prince Regent by the 1990s. Michael inherited his father's distaste for authority and his fondness for swashbuckling antics. A professional fisherman, he was hardly a computer geek. But he recognized in Hastings and Lackey the same cheeky outlaw spirit that had brought his own family to Sealand and kept it there for decades. Hastings and his wife flew out to visit Sealand, and a mutual love-in quickly followed. Like any good dot-com-trepreneurs, Hastings and Lackey incorporated. They called the new venture HavenCo, for "Haven Co-location." The pitch was simple. HavenCo would offer secure, anonymous hosting from Sealand. Microwave, fiber, and satellite links would provide fast and redundant bandwidth. Sealand's concrete legs would be kitted out with server racks and uninterruptible power suppliesband then, for additional security, flooded with nitrogen, so that only authorized techies wearing scuba gear could would have physical access. Who would host data there? HavenCo had plenty of ideas, including businesses looking to avoid pesky subpoenas, the Tibetan government-in-exile, anonymous currencies, and porn. Only a few things were off limits: spam, child pornography, and hacking attempts directed at HavenCo itself. Sealand's canned food pantry Ryan Lackey Well-known geeks Avi Freedman and Joi Ito came onboard as investors. Sameer Parekh was named chairman of the board. The company copied its bylaws from a do-it-yourself guide and drew up a detailed business plan with the kind of explosive growth assumptions everyone made during the dot-com boom: $65 million in revenue by the end of three years and a half-billion-dollar IPO. The new company promised customers "First World" infrastructure but with "Third World" regulations and taxes. Its sloganb"the free world just milliseconds away"bplayed up the cyberlibertarian idea that the Internet was about to make geography irrelevant. The violence inherent in the system Roy Bates has always been eager to find business partners. One of them, Alexander Achenbach, a former diamond dealer who seems to have been involved with an illegal diploma mill, drafted a constitution for Sealand, was named its minister for foreign affairs, and went around trying to persuade other nations to recognize Sealand. For reasons that are still unclear, he decided to oust Bates and install himself as head of state in 1978. Achenbach invited Roy and Joan Bates to a meeting in Austria with a group of investors. It was a trick to get them off of Sealand while his lawyer, Gernot PC