The work of one of the key Internet registrars could be destabilized by one of the organization’s former clients. We understand what is happening, and what is the essence of this story.
Who controls what
Distribution of blocks of addresses between regional registrars is engaged Internet Assigned Numbers Authority (IANA). Top five registrars (RIRs) coordinate actions – each is responsible for its own region: AfriNIC works in Africa, ARIN in North America, RIPE NCC in Europe and parts of Asia, APNIC in the Asia-Pacific region, LACNIC in Latin America and the Caribbean.
There are currently five organizations allocating IP addresses to Local Registrars (LIRs). Usually these are large providers, operators and infrastructure owners. One of these companies – Cloud Innovations – could influence the work of the African registrar. He started work in 2004. Prior to this, the region was overseen by four RIRs.
What happened in Africa
AfriNIC has been located in a state of crisis due to allegations of unfair distribution of IP addresses. A blow to the image of the registrar in 2019 was dealt by activist Ron Gilmette. He accused one of the organization’s coordinators of giving addresses to shell companies. Cost of “transfer” Ron appreciated at 50 million dollars. Against the background of the scandal, the top manager was fired and filed statement to the police.
The new head of AfriNIC promised to return the policy of the registrar to the “framework of the law” and spent internal audit. Examination showedthat one of the partners of the registrar – the company Cloud Innovations – received millions of addresses in 2016, which it distributed among clients from China, and did this in cooperation with the Hong Kong company Larus Limited. Managed enterprises one businessman.
The registrar considered that Cloud Innovations violated AfriNIC rules when it started leasing addresses in another region and demanded that they be returned. The company was also accused of changing the purpose of using the asset without notifying the organization about it, plus they referred to the fact that a significant part of the addresses allegedly used for illegal activities. Cloud Innovations disagreed with the allegations and noted that they followed the restrictions from the moment they were introduced.
The company filed counterclaims appreciating reputational losses of almost two billion dollars. The position was simple: AfriNIC has no right to require businesses to inform the registrar of every change in order to use addresses. They often change owners, so such bureaucracy would be excessive.
The court sided with Cloud Innovations and froze AfriNIC bank accounts. Because of this, the work of the registrar was actually paralyzed. The registrar was unable to form a board of directors, and the head of ARIN became publicly concerned about the situation. He stated that AfriNIC had become unmanageable. Other RIRs have expressed willingness to support the registrar so that the registrar can at least pay staff salaries.
The proceedings did not end in litigation. How figured out journalists from The Register, the company was able to influence the work of AfriNIC for a long time with the help of the independent NGO Number Resource Society (NRS), which published materials, blaming registrar in corruption and violation of the rules established by him.
NRS also promoted the idea of revising the powers of the RIRs so that they are only responsible for combating IP duplication and registering property rights, and an alliance of Internet providers that could freely sell IP addresses would be responsible for the allocation of blocks. The platform, as conceived by NRS, should work according to the exchange trading model, adjusting the value of assets depending on demand.
The activities of the non-profit organization were not limited to this. The NRS may have been involved in an attempt to gain access to employee accounts on the MyAfriNIC portal, which included registrar leadership elections.
However, NRS interests lay not only in the African region. The organization could also promote certain candidates in elections to the board of directors of another regional registrar – APNIC. Suspicious activities noticed and immediately connected lawyers to consider the situation.
The key problem underlying the crisis, experts consider shortage of IPv4 addresses. The transition to IPv6 is slow, and more and more people are entering the market who are ready to speculate on a rapidly rising asset. There have been similar cases before. For example, in 2019 ARIN completed in their favor proceedings with one of the partner companies. Its founders used the websites of non-existent organizations and shell companies to obtain rights to more than 750,000 IP addresses.
A court in the United States recognized such actions as deliberate fraud, and fraudulently obtained IP addresses were returned to ARIN. It seems that representatives of AfriNIC hoped for such an outcome during the conflict with Cloud Innovations. But the registrar was not ready for a lawsuit and a retaliatory attack from a partner company.
There are also opinion that RIR controls can indeed be reviewed if they do not fully avoid abuse. A number of members of the RIR community offers codify and clarify the rules. Such changes may mean various bans on the transfer of RIR addresses of all kinds to brokers.
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