Fun_People Archive
14 Sep
Encryption Expert Renounces U.S. Citizenship

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From: Peter Langston <psl>
Date: Mon, 14 Sep 98 13:55:25 -0700
To: Fun_People
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Subject: Encryption Expert Renounces U.S. Citizenship

X-Lib-of-Cong-ISSN: 1098-7649
Forwarded-by: nev@bostic.com
Forwarded-by: Dave Del Torto <ddt@lsd.com>
<http://www.nytimes.com/library/tech/98/09/cyber/articles/06encrypt.html>
[excerpted]

  Encryption Expert Says U.S. Laws Led to Renouncing of Citizenship
  By PETER WAYNER, wayner@nytimes.com

Most people who leave the United States and move to the Caribbean dream of
the freedom of perfect beaches, warm winters and tropical fruits. Vince Cate
says he sees a world where he has complete freedom to write computer
software and send it around the world.

In 1994, Cate <http://www.offshore.com.ai/vince/> moved to Anguilla and
helped bring Internet service to the tiny island. Last Sunday night, he went
a step further and flew to Barbados, site of the nearest American consulate,
to fill out the paperwork to renounce his U.S. citizenship.

Cate, an encryption expert and one of the sponsors of an annual academic
conference on financial cryptography in Anguilla <http://fc98.ai/>, said he
made the decision because he's setting up a new company, Secure Accounts,
that will design and build basic software to handle electronic transactions
<http://www.secureaccounts.com/>. The software will rely heavily on
encryption to scramble the data traveling between users in order to prevent
fraud, theft and embezzlement. After renouncing his citizenship, Cate said
in an e-mail message that he wanted "to be free from the silly U.S. laws on
crypto."

Normally, setting up an international company does not require forgoing
citizenship in the United States, but Cate's expertise in creating
encryption software places him in a special class. If he were to offer any
advice to non-U.S. citizens about the encryption work built into his
financial transaction software, he would violate U.S. laws, which treat the
transfer of such encryption as illegal international arms traffic.  These
laws apply throughout the world and are intended to stop U.S.  citizens from
assisting others in developing encryption software.

"I'm not actually writing any crypto code," Cate said in a telephone
interview on Thursday. "But I'm supervising people who are."

The U.S. government treats secret coding software in the same way it treats
howitzers, tanks and chemical weapons because it can allow foreigners to
hide their communications from U.S. intelligence-gathering organizations.
In past wars, the United States gained important advantages in the field of
battle through carefully gathered information, and the government does not
want to lose what it sees as technical high ground.

Many American software companies, however, see themselves losing market
share to foreign competitors who are able to create encryption products
unhampered by U.S. laws. They argue that good cryptographic expertise is
already well distributed around the world and that the laws only give
foreign competitors an advantage.

"We can provide a solution that works over the whole planet." Cate said of
his company. "U.S. companies can only provide a solution that is U.S.  only.
We certainly have a competitive edge by being offshore."

Recently, many leading software companies like Sun Microsystems and C2 Net
have opened branches outside the United States, hiring foreign nationals to
do the work. This has required a complicated dance to avoid breaking U.S.
export laws like the ones that Cate is escaping.

© 1998 Peter Langston