Past Investments in US Malware Maker Undermine Investors’ Pledged Battle Against Spyware

Investors’ pledge to fight spyware undercut by past investments in US malware maker Cyber investors announced commitments to fighting spyware, but at least one firm previously invested in an exploit maker. Now, some investors have announced that they too are committed to fighting spyware. More recently, the government has imposed economic sanctions not only on companies, but also directly on the executive who founded Intellexa. To hear some of these investors talk, you’d think that spyware has no place in a free and open society. Gula Tech and Paladin’s investment in Boldend — effectively a U.S.-based exploit and hacking software maker — and the two investment firms’ commitment to not invest in spyware companies might seem at odds.

Investors’ commitment to fighting spyware was recently announced, however at least one of the firm’s, Paladin Capital Group, had previously invested in a company specializing in developing malware. This news comes after the Biden administration announced six new countries joining an international coalition against commercial spyware, sold by companies such as NSO Group and Intellexa.

In addition to government efforts to limit the use of spyware, some investors have now publicly declared their commitment to not invest in spyware companies. However, this pledge may not be as straightforward as it appears.

“Got out” of the firm some time ago.

Paladin Capital Group, one of the largest investors in cybersecurity startups, has previously invested in Boldend, a little known offensive cybersecurity startup based in California. This is despite Boldend’s claim to have developed an “all-in-one malware platform” called Origen that could automate any conceivable attack against various devices.

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Michael Steed, founder and managing partner at Paladin, stated that the firm no longer invests in Boldend, but did not provide further details or explanation on why. Following a leak of Boldend’s slide deck, Paladin’s relationship with the company has been brought into question. Boldend’s board member, now listed as the company’s CEO, has stated that the startup is still active and operational.

“Very much alive and well.”

However, it is clear that Boldend has provided its products to various organizations, including the U.S. government and intelligence community. Despite this, both Paladin and Gula Tech, another investment firm, have committed to not investing in spyware companies.

But what does “free and open society” really mean in this context? The pledge leaves room for interpretation and potential loopholes. Paladin’s Steed stated that the firm is “very careful” in their investment decisions, regardless of the country or ally in question, to ensure they are not violating the concept of a free and open society.

“No matter whether it’s Israel, or Saudi, or France or Germany, we’re still very careful about what we invest in.”

The definition of a free and open society and where the red line is drawn remains unclear. Ultimately, it appears that only the investors truly know the extent of their principles and commitments in regards to spyware companies.