Executable file Proxy32.exe includes (self-extracts) CYGWIN/Putty binaries that are downloaded from CYGWIN/Putty mirror sites. I did not compile them myself. Those binaries are based on ssh/sftp/ssl/tls open source software. For user convenience I am distributing those binaries as part of Proxy32 installer. At any moment those binaries can be replaced by the ones that user has obtained from trusted sources or by ones that user has compiled from trusted source code. In particular, CYGWIN installation that comes with Proxy32 installer can be updated with the official CYGWIN installer at any time. If updated PuTTY binaries are needed to work with Proxy32 terminal, they can be downloaded from the home page of the PuTTY's creator. Proxy32 will not overwrite user-supplied PuTTY binaries in the proxy32 startup directory if their file creation date is newer than the file creation date for proxy32.exe module itself.
Code of proxy32.exe does not contain any encryption routines. It uses/calls standard Windows DLL libraries for creating TLS connections, but it does not include those DLL libraries into Proxy32.exe distribution, those libraries are packaged with Windows OS distribution. Therefore, Proxy32.exe gets TLS encryption strength according to the Windows OS distribution on which it runs. User can get newer encryption protocols by upgrading to newer version of Windows. For example, Windows Vista has added AES128 and AES256 block ciphers and elliptic curve key exchange and signature algorithms (ECDHE and ECDSA), then Windows 7 has added SHA256 hash and TLS1.1/TLS1.2 protocols.