"Explaining what we did to break this encryption is not exactly easy. In a word, we found a way to decrypt bit-to-bit images of iOS 4 devices. Decrypted images are perfectly usable, and can be analyzed with forensic tools such as Guidance EnCase or AccessData FTK (or any other tool which supports raw drive images and HFS+ file system). Decryption is not possible without having access to the actual device because we need to obtain the encryption keys that are stored in (or computed by) the device and are not dumped or stored during typical physical acquisition."
"All Apple devices starting with iPhone 3GS and running iOS 4 are affected, including iPhone, iPod and iPad devices."
Source: http://blog.crackpassword.com/2011/05/elcomsoft-breaks-iphone-encryption-offers-forensic-access-to-file-system-dumps/
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