Israeli Tax Authority Investigates Tax Evasion in Sale of Zisapel Family Startup DC Protection
The Israeli Tax Authority is investigating suspected tax evasion related to the sale of the startup DC Protection, part of the Red-Binat group owned by the Zisapel family. The probe centers on the February 2022 acquisition of DC Protection (formerly SecurityDAM) by Radware, a Nasdaq-traded cybersecurity company valued at $1.24 billion. Radware purchased the company from its founder and sole shareholder, the late Yehuda Zisapel, for $42.5 million. Following Yehuda Zisapel's death in March 2024, DC Protection shares were equally transferred to his three children: Roy Zisapel, who is also Radware's CEO, and daughters Carmi and Adi. Carmi serves as a director at DC Protection alongside Yossi Eliav, a director since 2014.
The investigation, led by the Tel Aviv Income Tax Investigations Unit, began in January 2024. Tax Authority investigators conducted searches at the offices of Red Computer Communications and DC Protection in Tel Aviv, seizing documents and computer materials. Yossi Eliav was also questioned after searches at his home and vehicle in Ramat Gan, where additional documents and his mobile phone were confiscated. The exact details of the suspected tax offenses, which involve alleged fraudulent methods to evade income tax, have not been disclosed.
Radware and DC Protection had a collaborative relationship in cybersecurity, particularly in defending against distributed denial-of-service (DDoS) attacks. DC Protection provided Radware with traffic diversion solutions that mitigate the impact of such attacks by redirecting malicious traffic to specialized scrubbing centers. Radware, founded in 1997 by Yehuda and Zohar Zisapel, focuses on cybersecurity and cloud application delivery, transitioning in recent years from hardware sales to cloud-based software services.
The Red-Binat group, founded by the Zisapel family, is a cluster of independent technology companies that often collaborate but operate as separate entities. The acquisition of DC Protection by Radware exemplifies this internal cooperation. DC Protection developed key infrastructure for Radware’s scrubbing centers, integral to its product portfolio, which led to the full acquisition in 2022.
DC Protection stated that, to its knowledge, there is no tax evasion by the company or its representatives, describing the matter as a professional dispute over tax rates. The company denied any connection to Red Computer Communications or other Red-Binat group companies regarding the investigation.
