Regardless of the situation in world economy, interest in buying IPv4 blocks on the global market is not declining. Some internet businesses face the need to expand their own networks, others view IPv4 as a sound investment of funds. Unlike many other assets, prices for IPv4 during the last decade have been growing steadily. According to our data, as of August 2022 the price is more than 40 USD per IP address.
Prior to concluding a deal, we recommend to thoroughly check the IP addresses. A technical and legal due diligence has several objectives. It allows to check if the technical parameters of the chosen IP block are suitable for the buyer’s business purposes, and whether the use of the block is restricted. Due diligence also helps parties to make sure that the transaction can be successfully completed, and protects against fraud. The risk of dealing with dishonest sellers should not be underestimated - information security specialists warn that in recent years the number of scammers offering hijacked blocks for sale has increased dramatically.
Here are nine important questions every buyer and seller should check prior to dealing with IP addresses.
1. Are the IP addresses blokclisted?
Blocklists (DNSBLs – Domain Name System Blocklists) are lists of IP addresses that are know to be used in spamming, spreading of malware, trojan downloaders, botnet controllers, etc. There are several hundreds of such blocklists, the most well-known being SpamHaus DROP, Barracuda and SORBS.
Use of bloklisted IP addresses is restricted. Most email servers are configured to filter out emails sent from blocklisted IP addresses. Moreover, many upstream-providers refuse to route IP addresses listed in the most authorative blocklist - SpamHaus DROP.
Due to these restrictions, blocklisted IP addresses are less valuable for business purposes and their price is lower. It is worth to consider buying blocklisted IP addresses if the buyer has available technical service to delist them. It should be noted that transfer of IP addresses to a new owner as such is not a sufficient basis for delisting them from a blocklist.
2. Does the seller own the IP addresses?
It is important to make sure that seller is the rightful owner of the chosen IPv4 block, and has the right to enter into a sale transaction.
The first source of information is always the WHOIS database of the relevant RIR. These public databases contain general information about IP blocks and their owners.
However, one must bear in mind the risk that information in WHOIS databases may be outdated. IP address owners do not always scrupulously comply with the obligation to submit to the relevant RIR all up-to-date information, including information on sale of IP addresses. That holds particularly true as regards owners of legacy blocks who in some cases don’t even have in place agreements with the relevant RIRs. In addition, there may be cases where a company has long been declared bankrupt or liquidated, however the WHOIS database still lists it as the lawful owner of the IP addresses.
Therefore, it is important to carefully study the seller’s incorporation documents, trade and court registries, as well as laws of the seller’s country of incorporation.
3. Are the representatives of parties duly authorized?
In order for the IP address sale transaction to be valid, it must be signed by duly authorized representatives of the parties. Otherwise, the deal may be declared void, and the buyer may lose both the purchased asset as well as the paid funds. Therefore, it is important to make sure that the individuals signing the Transfer Agreement and other transaction documents have the authority to do so.
4. What payment guarantees are there?
As with any transaction, each party should assess the reliability and solvency of their counterpart. Credit ratings, professional platforms, IP broker community and other professional sources may help with this task.
As a result of such assessment parties may come to a conclusion that the transaction is risky and that for their own financial safety it is desirable to use, for example, a bank guarantee or an escrow account.
5. Are there restrictions on the transfer of block?
Restrictions on transfer of IPv4 address blocks were introduced by RIRs to prevent speculative transactions with scarce IPv4 resources.
In ARIN region, the owner is not entitled to transfer a block of IP addresses if during the preceding 12 months it has acquired blocks from other owners or from ARIN itself. In RIPE NCC it is prohibited to transfer a particular block for 2 years after its acquisition. As for APNIC region, a 5-year transfer prohibition of applies one specific category of IP addresses.
Therefore, prior to entering into a transaction it is necessary to make sure that there are no temporary restrictions on the transfer of the selected block of IP addresses.
6. Are parties to the transaction on a sanctions list?
After the outbreak of war in Ukraine, RIPE NCC officially declared that in order to support free and global internet, it will not be applying the US and EU sanctions indiscriminately to all Russian holders of IP addresses, and will not be restricting their rights to use IP resources. Yet, due to the existing sanctions regime, numerous financial and payment restrictions have been introduced for Russian nationals and businesses related to Russian. This should be kept in mind when planning a transaction.
In addition, one should bear in mind that RIPE NCC maintains its own sanctions list of members personally sanctioned by the US and EU. Such members are prohibited to further transfer the IPv4 and IPv6 assigned to them, as well as to acquire new blocks.
7. Has the seller stopped announcing the IP addresses?
Just before the sale transaction one should make sure that the seller has stopped announcing the IP addresses via its own (or outsourced) autonomous system. Otherwise, the RIR will refuse to register the transfer the block to the buyer, and the buyer itself will not be able to start announcing the block.
At the same time, blocks that remain unannounced for long periods of time are most likely to become subject hijacking, as it is much easier for fraudsters to take control of them. Therefore, such blocks should be checked especially carefully before buying them.
8. Have the objects associated with the block been removed?
WHOIS databases contain a number of objects associated with an IP address block and its routing: route, domain and others. Prior to a transaction, one should check whether the seller has removed these objects.
Likewise, one should pay attention to the entries in the WHOIS database related to transfer of the block in temporary use to third parties, such as allocations, sub-allocations and assignments. In addition, if the IP address block has been rented, one should make sure that prior to the sale all rent agreements should be terminated.
9. What about geolocation?
For many buyers – government institutions, state corporations, online stores – geolocation of IP addresses can be an important factor.
In the WHOIS database the geographic location of the block will be updated shortly after its transfer to the buyer. In turn, changing geolocation in such business-critical services as MaxMind, it may take up to a month or more after the start of routing via the buyer’s autonomous system. This time factor should be taken into account when preparing for a deal.
An experienced IP broker with a good reputation on the market may help with choosing and auditing an IPv4 address block, as well as with organizing the sale transaction. The IPBUYSELL team includes engineers, lawyers and sales consultants with more than 10 years of experience on the telecom market.
Contact us, and we will help you.
