Hey, Shufflecake co-author here, thanks for the questions.
1. Indeed!
2. Wow wow wow, hold on there :D there is a misunderstanding, the "Swiss Government" was never involved not even remotely. First of all, this project has roots that go waaay back in time [1]. It was finally realized when I met Elia, who was then a student at a joint ETHZ/EPFL MSc program, and Elia accepted the thesis project that I proposed in the Kudelski Security Research team [2]. Kudelski Security (disclaimer: my current employer) is a traditional cybersecurity company, mainly focused on MDR, CISO-As-A-Service stuff, etc, but it's also one of the few ones which also has a dedicated fundamental research team, which I'm part of as a Principal Cryptographer. The goal of our team is not only to "invent new ways for the company to make money", but also to do "good PR", through e.g. scientific/academic publications, talks at conferences, open source software etc., all things which is what I'm personally focused on. As part of this, we offer the possibility to students to do their thesis in our team on some selected topic, and that's where Shufflecake came from.
That is, originally. As it is now, Kudelski Security is not involved in Shufflecake anymore, it's basically a pet project of Elia and myself, we pay out of our pocket for website hosting, etc, and we work on Shufflecake on our spare time. So, please feel free to contribute, we need help!
3. That is exactly the point! The "killer feature" of Shufflecake is exactly that there is no way to determine when you have finished giving up all your passwords, or there is still something undisclosed. It is true that this also means that the adversary "does not know when they can stop torturing you", but we firmly believe, both as a matter of philosophy but also pragmatically, that "plausible deniability" does not make sense if you're not willing to accept this risk.
Let me explain better, because this is a recurring questions we have.
First of all, you have to keep in mind the security model. We are not necessarily talking about Snowden-level paranoia here, it might be something more mundane, for example an investigation in a civil court because you're suspected of being in possession of illegal material, whatever "illegal" means. At least in democratic countries, you don't risk of being waterboarded for this. We know [3] that even TrueCrypt or similar systems are enough to be acquitted in some cases.
Then there are those cases where the adversary doesn't really care, they just want to find something. We recently had a discussion with a large international humanitarian organization, one of their officers told us "our agents often cross borders with laptops full of sensitive informations, in theory we are protected from searches by the UN treaty XYZ but... go to explain that to the angry Afghan guard at the airport!". Shufflecake allows to bypass this problem efficiently.
And then there are those cases where you are hiding secrets that you care about more than your own life. Let's be clear: if you are an investigative journalist in Guatemala and the Cartel kidnaps you, you're dead, period. If you're a member of a resistance group of a repressed minority in a dictatorial state and the police apprehend you, you're gonna disappear, no matter what. But, with Shufflecake, you at least have the chance maybe to resist and possibly save the life of your informants or comrades. With TrueCrypt, you don't really have this option.
Hope that clarifies, but feel free to ask more. Thanks!
[1] (in Italian) https://e-privacy.winstonsmith.org/e-privacy-X.html#i13
[2] https://research.kudelskisecurity.com/
[3] https://www.theregister.com/2010/06/28/brazil_banker_crypto_...