U.S. VPN provider shuts consumer service in response to Lavabit case

A VPN provider based in California has decided to shutter its privacy-conscious service rather than hand over its encryption keys to the U.S. government. This continues what can only be described as a chilling effect stemming from the government's aggressive moves to monitor online communications.

CryptoSeal, a small virtual private network (VPN) provider based in San Francisco, has elected to close its consumer-facing service. “With immediate effect as of this notice, CryptoSeal Privacy, our consumer VPN service, is terminated,” a notice reads on the company's website. “All cryptographic keys used in the operation of the service have been zerofilled...all records created incidental to the operation of the service have been deleted to the best of our ability.”

Ryan Lackey, CryptoSeal's CEO, said via email that his company is working "on technical systems which will make it possible to operate a service like this in the U.S. safely, but we think the best solution is legislative action by Congress and hopefully a successful resolution to the Lavabit case."

VPNs are secure tunnels to the Internet that allow users to mask their location, defeat regional restrictions, stay safe over public Wi-Fi connections, and maintain at least a modicum of privacy online.

CryptoSeal says it decided to shutter its consumer business in response to the Lavabit case. Lavabit was a security-conscious email provider that shut down its business in August after being compelled to hand its SSL security keys to the U.S. government.

"The consequence, being forced to turn over cryptographic keys to our entire system on the strength of a pen register order, is unreasonable in our opinion, and likely unconstitutional, but until this matter is settled, we are unable to proceed with our service," the company wrote in an email.

The company's consumer service had fewer than 1,000 customers, but was profitable, Lackey said.

The cryptographic keys used for its consumer service, called CryptoSeal Privacy, have been "zerofilled," Lackey wrote. Although it did not retain logs for the service's users, "all records created incidental to the operation of the service have been deleted to the best of our ability."

A VPN service for businesses, called CryptoSeal Connect, will remain running since it has a different user base and risk profile, Lackey said in the email. "Users opt in to corporate monitoring, and the users are actually all in regulated industries where monitoring is expected," he wrote.

Lackey told PCWorld in an email that "the company was founded in May 2011, although I was working on it a bit since October 2010.  Consumer service was launched in May/June 2013."

Background

Lavabit was asked to turn over its SSL keys because it couldn't immediately comply with the government's request to monitor the communications of one user in real time. Had Lavabit continued to operate, the company said, the SSL handover would have allowed the government to monitor the communications of every Lavabit customer instead of just the one user that was under investigation--presumably NSA whistleblower Edward Snowden.

CryptoSeal said in its statement that it would be “technically infeasible” for the company to respond to a similar demand in a prompt manner. Rather than be put in the same situation as Lavabit and required to hand over its encryption keys, the company decided to shut down its consumer product.

CryptoSeal didn't say in its statement whether the government was currently asking the company to hand over its encryption keys. From the tone of the note, however, it appears CryptoSeal's shut down was a preemptive move to avoid any surveillance demands from U.S. law enforcement.

Unlike Lavabit, CryptoSeal isn't going out of business entirely and will still provide its VPN services for corporate clients. That's similar to another secure communications provider, Silent Circle, which closed its Silent Mail email service in August in response to the Lavabit case. Silent Circle is an encrypted communications provider with offices in Maryland and the U.K. that offers a number of services beyond its now shuttered email product.

It's not clear how many users the CryptoSeal shut down will affect, but it is probably a small number. Based on Google's web cache, CryptoSeal has had its closing notice up since at least Wednesday, October 16. But the service closure didn't gain any attention until Monday, October 21 when a CryptoSeal user posted about the shutdown on Ycombinator's Hacker News.

Updated 10/22/2013 at 8:55 a.m. PT with CryptoSeal response provided by the IDG News Service

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