How Israel Invested in Spyware at Heart of Greek Scandal, EU Inquiry

In 2017, state-owned Israeli arms maker invested in two firms in bid to compete with NSO. It sold Cytrox to Intellexa, a firm operating outside of Israel, but documents show it’s still linked to the other

By Omer Benjakob, Avi Scharf
Jun 28, 2023

Six years ago, the state-owned defense contractor Israel Aerospace Industries (IAI) announced it was investing millions in two promising foreign firms: One registered in the Netherlands providing “cutting-edge cybersecurity solutions,” the other registered in Hungary and focusing on “cyberintelligence” for governments.

However, documents show the two firms – Inpedio and Cytrox – were actually set up by the same Israeli nationals that were involved in developing and then later selling the spyware known as Predator. That same spyware is currently at the heart of a massive political scandal in Greece, where it was used to hack the phones of a journalist and senior politicians – and raising privacy and rights concerns across the European Union.

In its June 2017 press release, the IAI presented Inpedio and Cytrox as two separate firms. Inpedio’s product, it said, “protects cellular iOS and Android devices from sophisticated attacks.” Cytrox, meanwhile, was said to do the opposite, “gathering intelligence from end devices” – like cell phones.

The former was supposed to offer defensive services, researching possible security breaches in computers and mobile devices to protect them against cyberattacks. The latter would go on to develop Predator, a spyware which exploits loopholes in cyber defenses to hack into mobile devices.

Documents and sources say they were formed as twin firms to offer potential clients a full spectrum of cyber solutions – defensive and offensive. According to former workers in Cytrox, the firms initially operated jointly from the same offices, and workers from Inpedio were also involved in the early development of the Predator spyware.

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IAI made the investment through its Singaporian subsidiary Custodio PTE. The dual investment was supposed to “expand IAI’s cyber R&D and its global footprint in this field,” as its press release noted at the time. But while it later sold its stake in Cytrox, it held on to Inpedio – though the firm has all but shut down and the millions invested have been lost.

Two firms, one office

Haaretz has reviewed corporate documents from the Netherlands, Hungary, North Macedonia, Singapore and Israel that show that the two firms’ founders and directors were the same Israelis. Inpedio was registered in the Netherlands in 2016 by two founders: Rotem Farkash and Abraham Rubinstein. The very same Farkash and Rubinstein would establish Cytrox Holdings in Hungary – where IAI invested in – and a subsidiary, Cytrox Software, in North Macedonia, in 2017. The two registered Cytrox with their Inpedio email accounts.

Farkash is a hacker-turned-cyber-entrepreneur who later became a partner and senior official in Intellexa, an alliance of digital surveillance firms founded in Cyprus and Greece by former Israeli army intelligence commander Tal Dilian. Rubinstein, a tech entrepreneur, ended up suing Dilian for diluting his own shares in Intellexa. That dispute has since been resolved.

IAI’s June 2017 press release did not disclose specific details, but documents seen by Haaretz show it initially bought 31 percent in Cytrox. IAI even had a director in the firm. After a year and a half, during which the offensive cyber firm failed to take off, IAI sold its stake to the British Virgin Islands firm that controls Intellexa. Two years later, Dilian’s Intellexa completed its takeover of Cytrox.

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