IP address fraud ruling highlights IPv4 market problems

Earlier this month, ARIN, American Registry for Internet Numbers, won a critical legal case which set a precedent against IPv4 address fraud. The verdict determined that ARIN was defrauded of approximately 735.000 IPv4 addresses by an individual who used 11 shelf companies to do so. The perpetrator was ordered to return the fraudulently obtained resources and cover $350.000 of legal fees.

As the prices of IPv4 addresses are rising due to exhausting supplies, this case might be the first one of more to come. Meanwhile, the emerging second-hand IPv4 market creates opportunities for both transparent IPv4 brokers and fraudsters alike.

“The current state of the IPv4 market urges IP address buyers to be aware of their IPv4 supplier’s reputation. Reputable companies don’t take abuse control lightly to protect the assets they are leasing. The seller must guarantee the legitimate origin of their supply and the buyer must not use the assets in illicit ways,” said Vincentas Grinius, CEO of Heficed, an IP address-centric company offering IP address, cloud, and dedicated server solutions.

There are several reasons why fraud in the IPv4 market is not an isolated occurrence, but rather a symptom of a more complicated problem.

As of today, the only regional internet registry with IPv4 resources available in its pool is AFRINIC, the African regional registry. The remaining registries have run out of free resources at different times in the past decade, with ARIN reaching this crucial point in 2015. What this means for the internet is that the only way to obtain an IPv4 address is to lease it in the second-hand market.

“As with every resource in high demand and low supply, various legal and illegal practices are being deployed to obtain and resell IPv4s. At Heficed, we have various abuse prevention processes in place to make sure the resources we obtain and lease do not contribute to any fraudulent scheme,” commented Grinius.

However, with the IPv4 second-hand market still scattered across a number of IP address brokers and the need for a transparent global solution to this problem unmet, there are precautions a lessee should keep in mind when obtaining IP addresses from a broker.

"Everyone interested in leasing IPv4 addresses should invest time and investigate the broker they are about to trust. Apart from various tools available to check the history of a given IP address, the customer should also consider the reliability of the broker by answering these questions: how long is the company in business? What are other clients saying about the company? Reputation is paramount in the IP address industry,“ finished Grinius.

With fraudsters actively leeching upon public internet resources, both the sellers and the buyers ought to invest extra effort in minimizing the risks connected to IP address abuse of different kinds.

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