With iOS 4, Apple released a 256-bit hardware encryption to keep the iOS device data safe and secure and even allowed third party developers to use the encryption APIs for more protection.
Now, a Russian company named ElcomSoft is claiming to have cracked the hardware encryption, and is offering software that allows anyone to do it.
"Until now, anyone running an iOS 4 device has been safe in the knowledge their data was protected and the encryption too strong to be cracked in any usable timeframe. What ElcomSoft did was to create a toolkit that allows for the extraction of the encryption keys from such a device. With those keys it's possible to decrypt an image taken from an iPhone, iPad, or iPod touch. Once that's done a forensic tool such as FTK or Guidance EnCase can be used to look at the data in great detail."
Rather than relying on a hardware dump from such a device, which'll be encrypted and may be missing some of the important data a forensic investigation needs, ElcomSoft can now gain full access to what's stored on a gadget such as the iPhone 4. This includes historical information such as geolocation data, browsing history, call history, text messages and emails, usernames, and passwords. They can even recover data deleted by the user from the device.
"ElcomSoft offer this iOS 4 forensic toolkit to security and law enforcement agencies, but anyone can purchase the software to extract the encrypted data on a device. The application is called "ElcomSoft Phone Password Breaker" and costs around $320 for the Professional edition. The speed of decryption on a home PC depends on your setup with Password Breaker supporting up to 32 CPUs and 8 GPUs.
More Info: ElcomSoft Phone Password Breaker