Pando

Is the super-secure Blackphone about to go dark?

By Paul Bradley Carr , written on June 28, 2016

From The Surveillance Valley Desk

When I first heard about Silent Circle's Blackphone -- the NSA-proof smartphone -- it sounded pretty cool.

I mean, who hasn't dreamed of being a secret agent, demanding to know "is this a secure line?!" before calling... I dunno... their grandma?

Ultimately, I went in a slightly different direction: Keeping my super-secret smartphone data secure by not actually having a smartphone. For anyone who is still considering parting with the $800 ticket price for the Android-based device, the spy fantasy may soon be over for you too.

According to new legal filings, first reported by Law360, Silent Circle is on the verge of declaring bankruptcy. A lawsuit, filed by manufacturing partner Geeksphone, alleges that the company is actively shifting debt overseas to avoid meeting financial liabilities:

“Defendants have admitted and acknowledged serious financial difficulties and they are openly transferring assets, personnel and operations out of the United States to newly formed companies in Switzerland ... which may render any award against them ineffectual,” Geeksphone said.

The suit claims that the company's financial problems stem from an inability to make even an $800 smartphone profitable.

But! There might still be hope for budding James Bonds (or Julian Assanges)...

A copy of the letter attached to the suit claims that an unnamed investor has agreed to invest up to $20 million in Silent Circle, but closing the funding round would require the Geeksphone debt to be restructured. If that falls through, the company will have to lay off  "dozens of employees and otherwise [reduce] its operating costs by around 50 percent,” the letter said. 

So far the company hasn't commented on their reported struggles, but I'll update this story if they do.

UPDATE: Silent Circle: “The reports of [our] death have been greatly exaggerated.”