The work of one of the key Internet registrars could be destabilized by one of the organization’s former clients. Let’s understand what is happening and what is the essence of this story.

Who and what controls

The Internet Assigned Numbers Authority (IANA) is responsible for distributing address blocks between regional registrars. The five largest 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.

Currently, five organizations distribute IP addresses among local registrars (LIRs). These are usually large providers, operators and infrastructure owners. One such company – Cloud Innovations – could affect the work of the African registrar. He started working in 2004. Prior to that, the region was overseen by four RIRs.

What happened in Africa

AfriNIC has been in a state of crisis for several years due to allegations of unfair distribution of IP addresses. Activist Ron Guilmette dealt a blow to the registrar’s image in 2019. He accused one of the coordinators of the organization of transferring addresses to shell companies. Ron estimated the cost of the “transfer” at $50 million. Against the background of the scandal, the top manager was fired and filed a police report.

AfriNIC’s new chief has promised to bring the registrar’s policies back “within the law” and has conducted an internal audit. The check showed that one of the registrar’s partners – the company Cloud Innovations – received millions of addresses in 2016, which it distributed to customers from China, and did it in cooperation with the Hong Kong company Larus Limited. One businessman managed the enterprises.

The registrar believes that Cloud Innovations violated AfriNIC rules when it started renting out addresses in another region and has demanded that they be returned. The company was also accused of changing the purpose of using the asset without notifying the organization, plus it was cited that a significant part of the addresses were allegedly used for illegal activities. Cloud Innovations disagreed with the allegations and said it had followed the restrictions since they were introduced.

The company filed lawsuits in response, estimating 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 hands, so this kind of bureaucracy was excessive.

The court sided with Cloud Innovations and froze AfriNIC’s bank accounts. Because of this, the registrar’s work was practically paralyzed. The registrar was unable to form a board of directors and the ARIN chief was publicly concerned about the situation. He stated that AfriNIC has become unmanageable. Other RIRs reported their willingness to support the registrar so that he could at least pay the salaries of the employees.

“Secret” lobbyists

The proceedings did not end with a lawsuit. As The Register journalists found out, 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 accusing the registrar of corruption and violation of the rules established by it.

The NRS also promoted the idea of ​​revising the powers of the RIR so that it would be responsible only for combating duplication of IP addresses and registering ownership rights, while the allocation of blocks would be the responsibility of an alliance of ISPs that could freely sell IP addresses. The platform — according to the NRS concept — should operate on a stock exchange model, adjusting the value of assets depending on demand.

The activity of the non-profit organization was not limited to this. The NRS may have been involved in attempts to gain access to employee accounts on the MyAfriNIC portal, which included registrar leadership elections.

However, the interests of the NRS lay in the African region. The organization could also promote certain candidates in elections to the board of directors of another regional registrar, APNIC. Suspicious actions were noticed and lawyers were immediately contacted to review the situation.

What’s next

Experts consider the shortage of IPv4 addresses to be the key problem underlying the crisis. The transition to IPv6 is slow, and more and more people are entering the market willing to speculate on the rapidly appreciating asset. There were similar cases before. For example, in 2019, ARIN settled a dispute with one of its partner companies in its favor. Its founders used the websites of defunct organizations and front companies to obtain rights to more than 750,000 IP addresses.

A court in the US recognized such actions as intentional fraud and the fraudulently obtained IP addresses were returned to ARIN. It seems that this is the result that AfriNIC representatives were hoping for during the conflict with Cloud Innovations. But the registrar was not ready for a lawsuit and a retaliatory attack from the partner company.

There is also the view that RIR control mechanisms can indeed be reviewed if they do not fully prevent abuse. A number of RIR community members suggest codifying and clarifying the rules. Such changes may mean different bans on the transfer of RIR addresses to all kinds of brokers.

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