The U.S. Department of Justice (DOJ) posted an immediate release in which they stated that a federal grand jury returned an indictment against the CEO of Sky Global and an associate. They are facing federal Racketeer Influenced Corrupt Organizations Act (RICO) charges.
Part of the immediate release states:
…According to the indictment, Sky Global’s devices are specifically designed to prevent law enforcement from actively monitoring the communications between members of transnational criminal organizations involved in drug trafficking and money laundering. As part of its services, Sky Global guarantees that messages stored on its devices can and will be remotely deleted by the company if the device is seized by law enforcement or otherwise compromised…
The indictment also alleges that Sky Global installs sophisticated encryption in iPhone, Google Pixel, Blackberry, and Nokia handsets. Sky Global device users communicate with each other in a closed network, and Sky Global routes these communications through encrypted servers located in Canada and France.
Interestingly, the indictment alleged that Sky Global employees used digital currencies (including Bitcoin) to “facilitate illegal transactions from the firm’s website, to protect its customers’ anonymity, and to facilitate the laundering of customers’ ill-gotten gains”. There apparently were also shell companies involved.
Encryption on phones is not illegal. Gizmodo reported (in 2017) that Apple had been encrypting data on phone and macOS for years. Not long after that, Android devices were also encrypted. The encryption is there to prevent people who are not you from accessing whatever is on your phone.
It seems to me that the problem Sky Global is having is not about their encryption. It is about allegedly allowing “criminal organizations involved in drug trafficking and money laundering” to use that encryption in an effort to avoid getting caught and having to face legal consequences.