The sale of a cyber technology firm co-founded by an ex-chief of Unit 8200, the Israeli military’s vaunted signals intelligence unit, and former Israeli prime minister Ehud Barak has enraged the country’s intelligence elite, who say it endangers state security.
Founded in 2019, Paragon Solutions was the brainchild of IDF Brig. Gen. (ret.) Ehud Schneorson, who commanded Unit 8200 until retiring from military service in 2017.
Paragon’s principal product, spyware dubbed “Graphite,” is inserted into cell phones through messaging applications, such as WhatsApp and Telegram, with a “zero-click” technology so that the phone’s owner is unaware of the breach.
In December, the company sold for $900 million to AE Industrial Partners, a U.S. private equity firm. (Barak received some $20 million in the first stage of a two-stage sale.)
Israel’s intelligence establishment leveled significant criticism at the sale at the time. It has received renewed scrutiny with the June 4 airing of an episode of “Real Time,” an Israeli investigative news show.
Israeli Prime Minister Benjamin Netanyahu took note of the episode, posting it in its entirety to his X account on Monday with the comment: “To see and not to believe. Watch.”
Even before the sale, Israel’s intelligence community had expressed reservations, foremost that Paragon employs spycraft similar to Unit 8200, from which it draws its leadership and much of its personnel.
By using similar techniques to those of Israeli intelligence, it risks exposing the latter’s methodologies, critics argued. Indeed, this appears already to have happened. In a story that shook Italy, Paragon’s Graphite spyware was apparently used to spy on some 90 Italians, including at least one journalist, presumably by the Italian government, which had purchased rights to use the spyware.
Meta, formerly Facebook, discovered the breach in January.
“When we understood that Meta exposed weaknesses that Paragon used to breach cell phones, it immediately created panic. We set up a meeting and decided that we’ll have to shut down capabilities against our targets. The meaning of this in our world is that critical intelligence information is lost, and all during wartime,” a senior member of Unit 8200 told “Real Time.”
The Italy scandal took place when the company was still a wholly owned and operated Israeli company. Now it is in the hands of foreign owners, amplifying concerns, with some warning that Israel’s own technology may be used against it.
Barak and Schneorson insist that the company has put mechanisms in place to prevent the wrongful transfer of any sensitive security information. Apart from the change to American shareholders, they say the company’s employees, business knowledge and development center remain in Israel.
However, “Real Time” claimed that these assurances were completely contradicted by AE Industrial Partners’ stated intentions.
In January 2023, AE bought REDLattice Inc., a U.S. cyber technology company, which works with America’s national security and defense establishment, including the Central Intelligence Agency, according to “Real Time.”
In an Aug. 24 report, AE revealed its intention to integrate the technologies of the two companies.
“The combination of graphite and REDLattice unites two cyber organizations into one of the best technology products in the world that is second-to-none outside the intelligence community. Together, the two companies will be able to provide a cyber intelligence platform to governments with large financial resources,” AE’s report said.
A Paragon employee also revealed to “Real Time” that the transfer of knowledge was in full swing. He said REDLattice researchers had been given a top-to-bottom overview of how Graphite works, down to the most secretive details.
Barak and Schneorson declined requests by the show for comment.
The two have shown a low tolerance for criticism. Two days after a well-known member of Israel’s intelligence industry, venture capitalist Michael Eisenberg, posted to X warning of the deal, they sued him for libel.
“Ehud Barak and Ehud Schneorson, former commander of 8200, seem to have gone rogue and even harmed the security of the State of Israel by taking its best engineers and undermining the work of the good guys in 8200, burning some of their capabilities,” Eisenberg wrote in February, part of a much longer X post on the issue.
By “taking its best engineers,” Eisenberg referred to the fact that Schneorson had poached some of the best talent at Unit 8200 for his company, luring them away with high salaries. The loss of cyber talent to the private sector has become a major concern for Unit 8200. Ironically, Schneorson warned of it before engaging in it himself.
In an interview with “Real Time,” Eisenberg reserved his harshest comments for former prime minister Barak: “He sold strategic assets of the State of Israel in the middle of a war for money. When my children are fighting in Gaza … These powerful tools, when not under Israel’s control, may be directed at us. The Israeli brain developed it. This is a strategic tool of the State of Israel,” he said.
“Even if there is a fraction of a percentage of damage to the security of the country, our soldiers, our hostages, during a time of war, who would take such a risk?” he added.
Several former high-level members of Israel’s intelligence branch also went on camera to express their anger about the sale, and what they said was the disloyalty shown by Schneorson toward his former unit.
The Paragon sale was never approved by the Defense Ministry’s Israeli Defense Export Controls Agency (DECA). On the contrary, at a meeting held in July 2024 at IDF headquarters, representatives of Israel’s intelligence agencies warned that the sale potentially endangered Israel’s security.
Following the meeting, an “urgent document,” was sent to DECA detailing the dangers and requesting that the sale not be approved, a senior intelligence official told “Real Time.”
Dangers listed included, among others, establishing American influence over the Israeli market in the strategic field, the leaking of strategic Israeli knowledge abroad, the relocation of cyber researchers to foreign countries and the loss of capabilities used by the intelligence community.
Barak and Schneorson claimed the sale didn’t require Defense Ministry approval.
“Real Time” reported: “The Defense Ministry issued a statement after the sale saying they would look into the matter, but since then nothing has happened, and the ministry is not even willing to answer us about whether any investigation has been conducted.”