British Encryption Startup Arqit Overstates Its Prospects, Former Staff and Others Say

Arqit says its encryption system can't be broken by quantum computers, but former employees and people outside the company question the relevance of its technology. The Wall Street Journal: A U.K. cybersecurity startup rocketed to a multibillion-dollar valuation when it listed publicly last fall on the promise of making encryption technology that would protect the defense industry, corporations and consumers alike from the prying eyes of next-generation computer systems. Founder and Chief Executive David Williams told investors at the time that his company, Arqit Quantum had an 'impressive backlog' of revenue and was ready 'for hyperscale growth.' But Arqit has given investors an overly optimistic view of its future revenue and the readiness and workability of its signature encryption system, according to former employees and other people familiar with the company, and documents viewed by The Wall Street Journal.

While the company says it has a solution to a quantum-computing security challenge that U.S. intelligence last year said 'could be devastating to national security systems and the nation,' government cybersecurity experts in the U.S. and the U.K. have cast doubt on the utility of Arqit's system. Arqit's stock price reached its highest level to date of $38.06 on Nov. 30 and has since fallen, to $15.06 on April 14, amid a broad pullback of young tech stocks. When the company secured its Nasdaq listing last autumn, its revenue consisted of a handful of government grants and small research contracts, and its signature product was an early-stage prototype unable to encrypt anything in practical use, according to the people. The encryption technology the company hinges on -- a system to protect against next-generation quantum computers -- might never apply beyond niche uses, numerous people inside and outside the company warned, unless there were a major overhaul of internet protocols. Arqit disputed that its encryption system was only a prototype at the company's market debut. 'This was a live production software release and not a demonstration or trial,' said a company representative. 'It was being used by enterprise customers on that day and subsequently for testing and integration purposes, because they need to build Arqit's software into their products.'

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