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Phantom Secure CEO pleads guilty to providing drug cartels with encrypted phones

The Phantom Secure network was used to help criminals "go dark" and avoid law enforcement.

The chief executive of Phantom Secure, a phone service designed to keep criminal activity away from the eyes of law enforcement, has pled guilty to his role in the operation of the network.

Vincent Ramos, the CEO of Vancouver-based Phantom Secure, was taken into custody in California following efforts by the FBI, Australian Federal Police (AFP), and Canadian police to track down the operators of the network.

As part of a plea agreement, Ramos admitted to "leading a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications devices," US prosecutors said this week.

The guilty plea follows the indictment of Ramos and three others in connection to Phantom Secure in March.

The Phantom Secure network was built upon customized BlackBerry handsets. These devices were given custom software which enhanced the encryption of each device via PGP, as well as offered secure email communications.

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According to US prosecutors, Ramos and Phantom Secure technicians maintained servers used by the network in Panama and Hong Kong, and virtual proxies were established to disguise their locations.

The Phantom Secure team was also able to remotely wipe any device seized by law enforcement to maintain the integrity of the network.

In order for criminals to obtain a custom Phantom Secure device and join the network, Ramos required a personal reference from an existing, trusted client. The company charged customers between $2,000 and $3,000 for a six-month subscription.

Phantom Secure was used by the upper echelons of criminals across the globe, law enforcement says, especially in the world of drug trading.

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The former CEO said that the network allowed criminals to communicate openly and organize the distribution of drugs including cocaine, heroin, and methamphetamine to countries such as the US, Australia, Mexico, Canada, Thailand, and the European bloc.

When it comes to cocaine, for example, the trade of at least 450 kgs' worth was made possible through Phantom Secure.

It is estimated that roughly 20,000 Phantom Secure smartphones were in circulation, half of which were used in Australia.

Ramos has agreed as part of his plea to forfeit $80 million in cash, alongside assets including houses, a Lamborghini, cryptocurrency stashes, and gold coins.

The former chief executive must also hand over all of the server licenses and domains which made up the Phantom Secure network infrastructure.

"The Phantom Secure encrypted communication service was designed with one purpose -- to provide drug traffickers and other violent criminals with a secure means by which to communicate openly about criminal activity without fear of detection by law enforcement," said US Attorney Adam Braverman. "As a result of this investigation, Phantom Secure has been dismantled and its CEO Vincent Ramos now faces a significant prison sentence."

"The United States will investigate and prosecute anyone who provides support, in any form, to criminal organizations, including those who try to help criminal organizations 'go dark' on law enforcement," Braverman added.

The lawsuit is the latest development in the "going dark" argument. Law enforcement has argued for years that encryption in mobile devices is creating barriers during criminal investigations, and the Phantom Secure network has shown that this technology can be used for such reasons.

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However, it is important to note that while Phantom Secure deliberately used encryption to tap into the criminal market, encryption, in general, is not used for these purposes -- and is, instead, crucial to the protection of personal information belonging to the general public.

Ramos is scheduled to be sentenced on December 17, 2018. A number of co-conspirators named in the complaint remain international fugitives and are yet to be apprehended.

On Tuesday, a Californian man pled guilty to defacing 11,000 websites in support of the Free Gaza movement. The websites that were compromised included NYC's Comptroller domain and a website belonging to the Combating Terrorism Center at West Point.

The individual faces up to 10 years in prison.

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