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Again, that's the whole point. He wasn't able to provide them with what they wanted, and doing so meant that he either had to allow them to intercept messages (or passwords) on Lavabit's application servers, which is the only place they could be intercepted. Doing so would require either impersonating their servers through a MitM or code changes on their server.

I do acknowledge in the article that this could simple be an overhyped reaction to placing a black box on his network, but the statements Levison made seem to indicate otherwise. And hey I could be wrong about this whole thing, it still is largely speculation based on circumstantial evidence.




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