Israeli Data Firm Alarom Shares Plunge Nearly 40% After FBI Probe into Unauthorized Internet Device Use

Alarom, an Israeli dual-listed data collection company, saw its stock plunge about 39% in after-hours trading on Wall Street following reports that the FBI is investigating the company for allegedly using private internet-connected devices without owners' consent. The probe focuses on Alarom's subsidiary NetNut, which provides access to residential proxy networks that allow users to mask their locations online. The FBI is examining whether NetNut was involved in connecting private home internet devices to its network without permission, potentially through software called Popa, which is suspected of hijacking devices.

The U.S. Department of Justice announced that the FBI seized several internet domains linked to NetNut's residential proxy infrastructure as part of a coordinated law enforcement action. Alarom stated it is taking the matter seriously and will fully cooperate with authorities to investigate any misuse of its infrastructure and hold responsible parties accountable.

Alarom's flagship product enables organizations to collect internet data by routing traffic through residential IP addresses, helping clients bypass geographic restrictions and customize content. The company transitioned from cybersecurity solutions under its former name Safe-T to focus on data collection after acquiring NetNut in 2019. NetNut had initially generated $2 million in annual revenue but required significant investment to stabilize and grow.

Alarom entered the Tel Aviv Stock Exchange in 2016 and later listed on NASDAQ, but faced profitability challenges and a competitive market. In 2023, the company rebranded to focus solely on NetNut’s proxy services, consolidating talent from other divisions. The FBI investigation centers on potential unauthorized use of residential devices within this proxy network, raising legal and operational concerns for Alarom going forward.