Operation Bernhart – Is Cryptocurrency an Evolved Version for Intelligence Services?

  • Counterfeiting currency was designed to solve German financial issues during World War II.
  • It is estimated over 135 million UK pounds were printed.
  • China produces 60% of the global cryptocurrency supply and 80% of the mining equipment.

In 1939, Operation Bernhard was a Nazi Germany project to forge British banknotes, counterfeit currencies. Originally, the project was dubbed “Andreas”. A the time the British pound was the reserve currency and was used as a main international payment method.

Nazi Germany needed forged currency to purchase raw materials for their defense industries. Counterfeiting currency was designed to solve German financial issues during World War II and also destabilize the economies of the nations they dubbed as enemies. Additionally, financing of espionage requires the use of foreign currencies. The challenge for the Nazis was to reproduce an identical paper for the banknotes and the watermark matrix. At the time, the task was given to professional counterfeiters, who were serving prison sentences. The process took close to 7 months.

Source: Jewish virtual library

The Germans also faced the challenge of deciphering the British system’s sequence numbers on the banknotes. Nazi chemists learned the process of aging paper and paint for the purposes of counterfeit currency production, as well as mixing the counterfeit and real bank notes to avoid having bank notes with sequential serial numbers.

Unfortunately for Nazi Germany, in 1941 the intelligence services had to stop the operation for political reasons. However, due to the dire need the project was restarted in 1942. The counterfeit currency was tested in Switzerland and was deemed 90% authentic. It was a signal for the German intelligence that they were  ready for the mainstream production of the counterfeit banknotes.

Bernhard Krüger.

Bernhard Krüger was put in charge of the project and was responsible for renaming the operation from Andreas to Bernhard. He was a member of the NSDAP, an SS Major during World War II, and leader of the Department VI F 4a, part of the SD-foreign branch in the Reich Main Security Office.

The banknotes were produced in the Sachsenhausen Nazi concentration camp in Oranienburg, Germany, used primarily for political prisoners from 1936 until the end of the Third Reich in May 1945. Two isolated areas were designated for the equipment needed for the bank notes production and 140 Jewish prisoners were utilized for the project.

One of the most famous producers of the notes was a Soviet Jewish prisoner Solomon Smolyanov, who was responsible for the production of the US currency, imperative to be used for Nazi Germany to send intelligence agents into the US. A first run of the counterfeit US currency was completed in 1945. The prisoners aged the paper by using mud and also mixing serial numbers in the packs. It is estimated over 135 million UK pounds were printed. In comparison, the British Empire’s total gold reserves in 1933 were 137 million UK pounds.

Source: Viator.com

Due to the Nazi counterfeit operation, the Bank of England in 1945 had to take bank notes with five pound denominations out of circulation in order to produce the new bank notes design.

In 1996, the US National Security Agency (NSA) Office of Information Security Research and Technology presented a report entitled, “How to Make a Mint: The Cryptography of Anonymous Electronic Cash.” The NSA is a national-level intelligence agency of the US Department of Defense, under the authority of the Director of National Intelligence. The report was published by MIT. The report presented hypothetical algorithms of the cryptocurrency and highlights the questions of the anonymity of the users and electronic fraud.

Cryptocurrency is an ideal way for intelligence services to pay their agents. At present there is no need to create counterfeit currencies since cryptocurrency is virtual and there are no costs associated with making payments and maintaining anonymity. It is also a perfect method for fundraising for opposition groups, including Hong Kong protest organizers, etc. It’s worth noting that China produces 60% of the global cryptocurrency supply and 80% of the mining equipment.

Russian spies used Bitcoin as a means to hide behind their hacking campaigns. Putin’s Russia has been obsessed with cryptocurrencies on the government level.

The cryptocurrency projects are the present version of operation Bernhard.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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