Cyberwar Manufacturers Plot To Stay On Right Side Of US

Montage of Paragon and NSO Group logos
FT montage/Shutterstock/Dreamstime

In the summer of 2019, as Paragon Solutions was building one of the world’s most potent cyberweapons, the company made a prescient decision: before courting a single customer, best get the Americans on side.

The Israeli start-up had watched local rival NSO Group, makers of the controversial Pegasus spyware, fall foul of the Biden administration and be blacklisted in the US. So Paragon sought guidance from top American advisers, secured funding from US venture capital groups, and eventually scored a marquee client that eludes its competition: the US government.

Interviews with half a dozen industry figures about the divergent paths of the two companies underline how the shadowy spyware industry is being reshaped around those friendly to American interests.

According to four of those people, the US Drug Enforcement and Administration Agency is among the top customers for Paragon’s signature product, nicknamed Graphite. The DEA’s use of Graphite was first reported by The New York Times.

The malware surreptitiously pierces the protections of modern smartphones and evades the encryption of messaging apps like Signal or WhatsApp, sometimes harvesting the data from cloud backups—much like Pegasus does.

Paragon was set up by Ehud Schneorson, the retired commander of Unit 8200, the Israeli army’s elite signals intelligence arm. According to people familiar with the company, which includes ex-Prime Minister Ehud Barak on its board, it has secured investment from two US-based venture capital firms, Battery Ventures and Red Dot.

Paragon, Barak, Battery Ventures, and Red Dot declined to comment.

In 2019, even before work on Graphite had been completed, on advice from a retired senior Mossad official, Paragon hired DC-based WestExec Advisors, the influential advisory group staffed by ex-Obama White House officials including Michele Flournoy, Avril Haines, and Antony Blinken. Ex-US ambassador to Israel, Dan Shapiro, was also consulted, people with knowledge of the advisory effort said. Shapiro declined to comment.

WestExec said it “advised Paragon on its strategic approach to the US and European markets, as well as the formulation of its industry-leading ethical commitments designed to ensure the appropriate use of its technology,” adding it was “proud of our contributions in these critical areas.”

After the election of Democratic President Joe Biden in 2021, Blinken was appointed secretary of state, while Haines is now director of national intelligence. Both had departed WestExec by the time of the Paragon contract, the lobbying firm said. Flournoy—once considered in the running to lead the Defense Department—remains an influential US voice on foreign affairs.

American approval, even if indirect, has been at the heart of Paragon’s strategy. The company sought a list of allied nations that the US wouldn’t object to seeing deploy Graphite. People with knowledge of the matter suggested 35 countries are on that list, though the exact nations involved could not be determined. Most were in the EU and some in Asia, the people said.

“Everything they did was with the strategy that at the end of the day, the US should see them as the good guys,” said one person familiar with the decisions.