Wiz is sued for NIS 200 million over alleged ‘phantom’ acquisition of Israeli startup

Cybersecurity unicorn Wiz is facing a NIS 200 million ($65 million) lawsuit for misconduct and misrepresentation over the alleged “phantom” acquisition of Israeli startup Raftt.

According to the lawsuit submitted to the Tel Aviv District Court on Monday, Raftt accuses Wiz of false representation regarding the purported purchase of the cloud software startup in December 2023, and of breaches of intellectual property rights and fiduciary duties.

Wiz is alleged to have bribed Raftt’s founders, hired away employees, and misappropriated the startup’s technology without compensating investors.

Founded in late 2020 by Gahl Saraf and Roy Iarchy, Raftt has developed a cloud platform for creating and sharing user-friendly virtual development environments. Its current investors and shareholders include venture capital funds Oasis and Cardumen Capital, as well as several angel investors.

In December 2023, when Wiz co-founder and CEO Assaf Rappaport announced the acquisition of Raftt and welcomed its employees and founders, he hailed the startup’s technology for providing a “best-in-class cloud-native platform” for development as well as security teams.

But the lawsuit filed by law firms ERM and Pearl Cohen Zedek Latzer Baratz alleges that no acquisition of shares or intellectual property ever took place. Furthermore, it is claimed that no lawfully approved ‘acquihire’ – a transaction where a company purchases the right to recruit a team in coordination with management – was ever executed.

“The founders presented the plaintiff’s [Raftt’s] investors with a false representation that this was merely a ‘job arrangement’ for the employees, and nothing more,” according to the lawsuit. “In practice, the employees’ transfer was part of an organized plan to establish a new project at Wiz, aimed at developing a new product based on the plaintiff’s cohesive employee team and on the plaintiff’s technology.”

“Wiz Code is based on unlawful taking of the plaintiff’s IP, stolen by the founders to develop Wiz’s new product,” the lawsuit claims.

Wiz denied the allegations.

“When a company is successful, unfortunately, there are those who try to take advantage and file lawsuits,” the company said in response. “We are saddened to see that this time the founders of Rafft – young and talented entrepreneurs – are a target and are being harmed by this.”

“As with past lawsuits filed against Wiz, we are confident that this lawsuit will also prove to be baseless,” the cybersecurity firm added.

Raftt and its current shareholders allege that the misrepresentation of the acquisition deal was designed to mask a transaction between Wiz and the startup’s founders, who were paid $15 million. The personal payoff was part of a “coordinated fraudulent scheme” designed to transfer Rafft’s entire workforce to Wiz while hiding critical details from the startup’s board and investors.

“Wiz and the founders acted together behind the plaintiff’s back to steal its ability to realize the value of its employee team and to steal its IP, into which the plaintiff invested millions of dollars and years of training and development, for the development of Wiz’s new product, Wiz Code, which is now one of Wiz’s three main products,” according to the lawsuit.

The filing of the lawsuit comes as EU regulators approved Wiz’s $32 billion sale to Google. The deal, which marks the largest-ever purchase of an Israeli tech company, was announced in March 2025.