A system and method for simultaneous compression and encryption of data. The system analyzes input data to determine its properties and creates a transformation matrix based on these properties. Using this matrix, the input data is transformed into a modified distribution, generating a main data stream of transformed data and a secondary stream of transformation information. The main data stream is compressed, and both streams are combined into a single output. The system implements security measures to protect against various attacks, including side-channel vulnerabilities. By using a dyadic distribution algorithm, the system achieves both compression and encryption in a single pass over the data, offering significant efficiency gains. The system can operate in both lossless and lossy modes, providing flexibility for different application requirements. This approach offers a unique solution for data transmission and storage scenarios where both data reduction and security are critical concerns.