PayPal’s Cybersecurity Firm Acquisition Official

Barely a month after agreeing to buy Israeli predictive-security startup CyActive, PayPal announced on Thursday (April 9) that it has closed the deal.

Terms of the acquisition weren’t announced, but previous reports put the price at somewhere between $60 million and $80 million. The 2013 startup had collected a reported $2 million in venture-capital investment.

PayPal had already announced that CyActive will form the core of its new security center in Israel. Unlike its Fraud and Risk Detection Center in Tel Aviv, the new site, in Beersheva, will focus on predictive threat prevention and detection, which is CyActive’s forte.

Specifically, CyActive’s technology uses a model borrowed from biology to predict how software viruses and other threats will develop. CEO and co-founder Liran Tancman, who has a degree in biology and cognitive sciences (and also spent a decade in the Israeli army’s intelligence corps), told the Israeli business daily Globes that the idea for the company came from his wife. “I developed an algorithm that learns how things can develop in the future, and my wife asked me why I didn’t try to use it to predict how viruses would develop,” Tancman said. “I took the idea to Shlomi” — CyActive CTO Shlomi Boutnaru — “and it all started from there.” Boutnaru had served in Israel Air Force writing software and then joined the intelligence corps.

PayPal hasn’t said how quickly CyActive’s 20-person staff will add personnel. The online payments giant also hasn’t said whether the new security center’s mission will be expanded to include more mundane security issues, such as making sure PayPal’s basic security systems are functioning correctly. Last August, PayPal was publicly embarrassed when it turned out that the two-factor authentication system it had touted for users was, after all, relatively easy to circumvent — and that the vulnerability sat unfixed for two months after it was reported to PayPal by a 17-year-old security researcher from Australia.


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