Arqit Won’t Pursue Quantum Satellite Side of Their Strategy, Faces SEC Probe

Arqit
Arqit

Arqit Won’t Pursue Quantum Satellite Side of Their Strategy, Faces SEC Probe

Insider Brief

  • Arqit will drop its plan to use of quantum satellites as a way to deliver its quantum-safe encryption products.
  • The company developed an advanced form of terrestrial delivery for its quantum-safe solutions.
  • Media sources are also reporting that Arqit is facing scrutiny from the SEC.
  • Image: Arqit

Arqit will not be pursing the use of quantum satellites as a way to deliver its quantum-safe encryption products, according to a release on Space Impulse. Financial media are also reporting the company is facing a probe from the Security and Exchange Commission — SEC — over its special purpose acquisition company merger.

Arqit’s software uses identical sets of random numbers — “replicated entropy” — that must be delivered securely and frequently to data centers. The company invented a quantum satellite protocol to help deliver replicated entropy. That system relied on the launch of satellites. However,  Arqit has been using a terrestrial method of delivering replicated entropy that do not rely on quantum communications.

The releases states: “The security of end point encryption keys is as strong with the terrestrial method as it is with the satellite method. Arqit has therefore concluded that it no longer needs to incorporate satellites or the associated ground infrastructure into its core QuantumCloud offering in order to deliver a quantum safe product.”

Arqit plans to sell the satellite already under construction. Intellectual property developed for the satellite side of Arqit’s business will likewise be sold, according to the release.

“Following the sale of its satellite currently under construction, Arqit will build no further satellite infrastructure and intends to licence its quantum satellite IP to subsequent customers with similar requirements, which will enable those customers to build their own systems,” the company reports. “Arqit is currently in discussions with a number of potential customers regarding both the purchase of its existing satellite and the licence of its quantum satellite IP. Arqit expects the licencing of its quantum satellite IP to generate additional revenues without additional capital expenditure.”

Financial Headwinds

The move away from very expensive satellite construction and launches may be one way Arqit is navigating through a storm of financial challenges.

The company has recently been jostled by rising costs of and criticism about its satellite technology. Private Equity News is also reporting that Arqit is facing an SEC probe on its special purpose acquisition company — or SPAC — merger with Centricus Acquisition. SPACs are often criticized for being a stealthy way to become a publicly traded company without the rigors of the initial public offering — IPO — process.

Private Equity News reports that the company is being investigated over how it disclosed contracts.

Arqit believes that this is simply an SEC fact-finding inquiry and plan to cooperate with the investigation into Arqit and Centricus Acquisition, Private Equity News reports.

Cutting Costs, Boosting Results

Arqit officials report that they expect that cutting costs from abandoning its satellite approach and raising funds from the sale of the satellite and IP will boost future results.

David Williams, Founder, Chairman and CEO of Arqit said: “Through innovation we have simplified our technology and removed significant future capital expenditures. The resulting software is now easier to support and consume by customers and is suitable for a high growth, annual recurring revenue style business. The White House has urged all Federal Organisations to upgrade to post quantum cryptography and the NSA has declared that symmetric key encryption is the best way to do that. We believe that Arqit is the only company in the world that can deliver this in a zero trust and scaled way. Now, through channel partners like AWS, Dell and Fortinet, the world can buy the stronger, simpler encryption it urgently needs.”

Matt Swayne

Matt Swayne

Matt Swayne is a contributor at The Quantum Insider. He focuses on breaking news about quantum discoveries and quantum computing.

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