Encryption Algorithm

This is my C++ implementation of the encryption algorithm that is used by the Cyberoam Protocol to encrypt passwords. Note that the code is released under the GNU General Public License. Also, there is a reasonable amount of guesswork that I went through before arriving at the final algorithm. I have left out the include files.

/*
    Copyright (C) 2002 Rahul Mittal <admin@rasteroid.com>

    This program is free software; you can redistribute it and/or modify
    it under the terms of the GNU General Public License as published by
    the Free Software Foundation; either version 2 of the License, or
    (at your option) any later version.

    This program is distributed in the hope that it will be useful,
    but WITHOUT ANY WARRANTY; without even the implied warranty of
    MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the
    GNU General Public License for more details.

    You should have received a copy of the GNU General Public License
    along with this program; if not, write to the Free Software
    Foundation, Inc., 59 Temple Place, Suite 330, Boston, MA 02111-1307 USA
*/

char* Encrypt(char* sPlaintext, int nLength) {
    assert (nLength <= 8); // Max length of plaintext password
    char* sTimestamp = new char[10];
    char* sCiphertext = new char[10 + 3*nLength]; // holds ciphertext
    int n1 = 0, n2 = 0;

    // Generate time stamp
    sprintf(sTimestamp, "%010d", time()); // get and store timestamp
    strncpy(sCiphertext, sTimestamp, 10);

    // Generate ciphertext
    for (int i = 0; i < nLength; i++) {
        char c = sPlaintext[i];
        short nScramble = ScrambleTimestamp(sTimestamp, n1, n2);
        for (int j = 0; j < 10; j++)
            sTimestamp[j] ^= c;
        int n = (nScramble & 0xFF) ^ c ^ (nScramble >> 8);
        sprintf(sCiphertext + 10 + (i*3), "%03d", n);
    }

    return sCiphertext;
}

short ScrambleTimestamp(char* sTimestamp, int& nCurrent, int& nPrevious) {
    // nCurrent == BP+0x10
    int nScramble = 0;
    int nIter = 0; // BP+0x1E
    int i;
    int nTemp1; // BP+0x04
    int nTemp2 = 0; // BP+0x12
    int nFinal = 0; // BP+0x20

    while (nIter < 5) {
        i = nIter * 2;
        nScramble = nTemp2 ^ ((sTimestamp[i] << 8) | sTimestamp[i+1]);
        nTemp1 = (nCurrent + nIter) * 0x4E35;
        nCurrent = nPrevious + (nScramble * 0x015A) + nTemp1; // BP+0x0A
        nPrevious = nScramble * 0x015A;
        nTemp2 = nScramble * 0x4E35 + 1;
        nScramble = nCurrent ^ nTemp2;
        nFinal ^= nScramble;
        ++nIter;
    }

    return static_cast<short>(nFinal & 0xFFFF);
}