The profession of brokering IPv4 addresses is both rewarding and challenging, as it involves negotiating deals between buyers and sellers who are often situated on opposite sides of the globe, with different cultural backgrounds, different native languages, and different business practices.

A seller from Bulgaria who wants to “move quickly” with the sale of an IPv4 block may expect the buyer to sign the sales contract that day and to send the funds to the escrow agent within 48 hours.  The buyer, located perhaps in Cambodia, also agrees to “move quickly”, meaning they will expedite their normal approval processes, have their legal team review the sales contract within 30 days and commit to funding escrow by the close of the fiscal quarter.

What does an IPv4 Broker do?

Part of the broker’s job is to facilitate communication between the parties, temper their expectations, and get them to meet in the middle, whether they are situated 12,000 miles apart, or located in the same city.  It’s rewarding when it works.  Along the way there are bumps in the road, and here are some of the more humorous ones we’ve encountered.

The Inquiry Process

Potential clients reach out to us in a number of ways, commonly by submitting an inquiry form from our website.  Here are some actual inquiry submissions from prospective buyers:

   “I need an IP address.  I want only one or two.  How much to purchase & rent….Tell Me Hurry!”

   “My Playstation 3 will not obtain an IP address.  Everytime I try, it says it has timed out.  May i acquire one? Help please?”

   “I’m looking for a US-based IP that I can use for posting on Craigslist. If you have these IP’s that are not blocked, please send me an email. Kindly indicate how much would it cost. Thanks!”

Those are some tough requests.  Fortunately, we receive inquiries from prospective sellers that we can match them up with:

   “I’m willing to sell my IP address for at least $10 to cover my cold cut cost.”

   “I’ve got a static IP from Comcast.  How much can I get for it?”

We also receive referrals from happy customers as well as … other sources.  An IT consultant once asked if he could earn a referral fee by recommending to us a potential buyer where he had previously done consulting work.  We expected a hearty introduction with contact information for the decision makers of this mid-sized company, leveraged by the consultant’s prior relationship.  Instead he sent us their company name along with this eyebrow raising note:

   “This lead is great.  They really need IP addresses.  But don’t mention my name, because they’re really mad at me!”

Due Diligence

It’s common for organizations to vet one another prior to engaging in significant transactions.  Fortunately, IPv4 sales are generally low-risk.  The Regional Registries themselves do a fair amount of vetting to ensure IP address sellers are legitimate holders of the addresses they wish to sell.  Escrow agents are generally used to hold a buyer’s funds during the transfer process and are only released after the IP addresses are successfully transferred to the buyer.

Nonetheless, corporate bureaucracies often require vendor onboarding forms to be filled out by buyers, sellers and brokers.  Outside the U.S., the onboarding process can be more intense.  A fair number of organizations in Asia and Latin America require their vendors to sign lengthy declarations that they don’t engage in bribery, fraud or child labor.  That’s commendable, but it’s questionable how much of a deterrent to fraud it is to make a fraudster promise in writing that he’s not, well, a fraudster.

And even if you scoff at the notion that you would never offer bribes to gain business, you better read those anti-bribery clauses carefully.  One of them we encountered specifically stated that we would be in violation if we offered their company employees “free golf or karaoke”.  That was almost a deal killer for us.

We once brokered the sale of a large IP block from a world renowned beer brewery to a world renowned tech company that had a young, innovative staff with high energy.  When the deal was completed, the buyer’s young tech guys asked if they could trade some of their company “swag” with us and with the beer guys.  They offered up some company T-shirts and mugs.  It could hardly be considered bribery – the deal was complete and everyone was happy.  We gladly sent them a box of IPTrading branded flash drives and “IP Man” DVDs leftover from a recent trade show.  But when the beer brewery execs didn’t reply and finally claimed they weren’t interested, the tech guys were aghast.  “They get to go to work every day and make beer, and they can’t get excited enough about life to trade T-shirts?” they complained.  It was a bummer.

It could be worse.  One of our clients prohibits gum chewing by its employees.  Fortunately, they don’t extend that restriction to its vendors.  But we have to be careful not to bribe their employees with a stick of gum or we could be in double trouble.

Contract Negotiation

We’ve got our buyer and seller lined up, they’ve passed each other’s due diligence tests and now it’s time to engage in the sales contract.  We generally present one of our standard contract templates that we’ve honed over the years based on our extensive industry experience.  Then both sides review it to see if they’d like to make any revisions.  Often they don’t, but sometimes they do after a legal review, which we understand, but also see as something of a necessary evil.   With the protections offered by escrow agents and the vetting of the Regional Registries, we haven’t encountered a single legal dispute between our clients in the course of brokering well over a thousand IPv4 transfers.

As alluded to earlier, the pace at which deals progress varies quite a bit in different regions of the world due to differences in local laws, Registry policies and corporate cultures.  It’s a simple fact that transfers in the ARIN (North American) region take on average a few weeks (from contract signing to transfer completion) while transfers in the LACNIC (Latin American) region often take several months.  When we want to do an inter-regional transfer between a “fast” seller and a “slow” buyer, we brokers have the tough job of pushing the slow guys and putting the brakes on the fast guys.

In the early part of the last decade, when ARIN still had a pool of IP addresses to distribute to its own members, this dynamic came into play quite a bit.  ARIN sellers often had to be matched up with APNIC buyers in the Asia-Pacific region as APNIC had run out of IP addresses first.  We once went through lengthy contract negotiations between a group of U.S. based companies wishing to sell some sizable IPv4 blocks to a large Asian cloud provider.  The U.S. sellers would review our contract template and make some minor revisions, usually within a day or two.  We’d send the revised contracts to the Asian buyer who would pore over them for weeks and finally return them with a slew of rather needless revisions (the proverbial “sea of red” in Word docs that makes every IP broker cringe).  The U.S. sellers would turn these around it one day, accepting most revisions and tweaking a few others.  Then back to the buyer it would go, and after a couple of months of this, just when we thought our sellers would lose patience and walk, the buyer sent us the good news:  “Our legal team has approved the contracts!”

We cheered and replied, “Great.  Can you please sign them?  We’ll get these countersigned and back to you ASAP.”  The next day we received their answer: “That was legal approval.  Now we must seek purchasing management team approval.”   When we asked how long that would take, we were told it would be another month.  Amazingly, we kept everyone on board until the purchasing team approved it.  We kept them on board when we subsequently learned the buyer wouldn’t accept e-signing and required hard copies of the contracts be couriered around the world.  We kept them on board when the contracts had to be re-sent because all the U.S. sellers didn’t stamp the contract with their “chop” (an Asian vernacular for corporate seal – we had to help some of the sellers create one as they aren’t as commonly used in the U.S.).  And then we kept them on board when the buyer took a month to fund escrow instead of the week specified in the contract they just spent six months revising.  But the deals finally got done, the buyer got their IP addresses and the sellers all got paid.  That would never happen in today’s market.  There’s too much competition among buyers willing to move quickly.

It’s not just the international deals that highlight the differences in expectations between buyers and sellers.  One of our favorite contract negotiators was a U.S. seller who sold a number of small IP blocks through us over a span of several years.  We initially sent him our appropriate contract template, his attorney made some minor revisions, and he sent it back to us stating “this is the contract we’ll use”.  He explained that any buyer who wanted to purchase his blocks had to sign that contract.  In a way it made sense.  The dollar amounts on these sales were relatively small, generally under $10,000.  There was a lot of demand for small blocks at the time.  This seller simply did not want to spend the time and effort to review any further contract changes, and if a buyer couldn’t accept the contract as-is, another buyer would come along the next week.

This seller’s strategy worked well, and we banged out quite a few quick sales for him.  Then along came a prospective buyer, a mid-sized staffing company, seeking to purchase a very small block.  We sent them the seller’s standard contract and explained that he wouldn’t entertain any modifications to its language.  But this buyer’s legal team was used to getting their way.  They reviewed it and insisted, against our advice, that we present the seller with a number of required revisions.  Our email to the seller went something like this:

   “The buyer would like you to consider these changes:

            Paragraph X:  We require 30 days to fund escrow instead of 7.

            Paragraph Y:   Please add additional Buyer indemnification, extending to our affiliates, officers, employees, against losses or damages incurred by …  (this one went on for while)

            Paragraph Z:  Governing jurisdiction must be Michigan, not Georgia.”

About 20 minutes later we received the Seller’s reply:


We eventually found a seller who accommodated the buyer’s requests, but it wasn’t Mr. Nope.

Show me the Money

The IP sales contract states how long the buyer has to fund escrow.  On average, it specifies a time frame of 7-10 days.  It’s amazing how many companies simply ignore this due to their internal procedures.  They’ve just negotiated a contract which clearly states the time frame for payment.  When the time frame passes and they haven’t funded, we hear everything from “Our purchasing agent is on leave and hasn’t generated the P.O. yet” to “Well, our company policy is Net 30”.  We then let them know they are in breach and jeopardizing the deal, they expedite their normal process, and the money gets sent.

When one of our U.S. based sellers complained that an overseas buyer was late in funding escrow, we asked the buyer for status.  English was not his primary language, and here was his response:

   “We apologize for the incontinence caused of payment delay.”

The buyer was certainly well-intentioned, and his reply gave everyone a chuckle, including the seller.  The funds arrived shortly after.

Not all humorous miscommunications are due to language barriers.  Some are simple typos.  A U.S. buyer provided this status update on their escrow funding:

   “Getting money transferred to the escort service and will confirm once done. “

One of our other buyers was a small, regional U.S. bank.  When their payment to escrow didn’t arrive in time, we asked why their wire transfer was delayed.  Our contact replied, in obvious frustration:

   “Our accounting department is stuck in the 80s and will only do paper checks.  ‘You’re a Bank, right, you ask?’  Yup, we’re a bank with online services, wire transfers, ACH and all the modern stuff but the accounting   group apparently doesn’t like to use that fancy stuff.   Grrrrrr.”

Our own bank is pretty efficient at processing wire transfers, but one of our outgoing wires to a customer in Spain got delayed.  When we inquired as to why, our bank explained that the wire was flagged for investigation by their OFAC group.  These are the guys that look for potential payments to terrorists or to countries prohibited from receiving funds by the federal government, so it was pretty concerning.  We were asked why we were sending money to Venezuela.   “We aren’t.  The money is going to Spain.”  After some back and forth, we realized and explained that the customer’s address wasn’t in Venezuela, but at Venezuela Avenue, located in a coastal city in Spain.  That got quickly resolved, but a few weeks later we ran into the same problem sending a wire to the same customer.  We cleared it up again and noted in the future to abbreviate the street name on the wire transfer form.  We’ll do the same for any customers with addresses on Syria Street or North Korea Terrace.

The use of escrow agents in inter-company transactions is fairly common in North America and Europe, but is less widely used in other parts of the world.  We sometimes have to educate our clients on the benefits of and security behind the escrow process.  One particular buyer based in Indonesia wanted a seller who would transfer him the IP addresses first before he made payment.  As he explained, “What if I give the seller the money first and he runs away?”  We pointed out that if the seller transferred him the IPs first, the seller might also fear that the buyer might take his IPs and run away.  So we explained the escrow process in detail; how escrow agents hold our buyers’ funds in segregated accounts, how they are regulated like banks, and how they have a fiduciary duty to safeguard those funds and only release them according to the terms of the escrow agreement.  Slowly the buyer seemed to grow in his understanding of the escrow process and over the course of several more email exchanges we thought we had gained his trust.  Finally, we sent him a sales contract that very explicitly laid out the process by which he would fund escrow, the seller would transfer him the IP addresses, and then the escrow agent would release the funds to the seller.  After several days he replied with only one question:  “What if the escrow agent takes all our money and runs away?”

The Man in Black

None of our chronicles of humorous IP brokerage stories would be complete without the tale of The Man in Black.  It’s funny.  Not in the “ha-ha” funny sense, but just as one of our most peculiar and bizarre encounters.  Quite a few years ago, before LACNIC (the Latin American Registry) allowed buyers and sellers to directly transfer IP addresses, we had interest in acquiring some LACNIC IP space.  We saw the high potential for growth in the region, and we were actively promoting policies that encouraged IPv4 transfers in hopes of sparking a vibrant IP address market.

One day we were contacted by the owner of a network operator based in Costa Rica.  Let’s call him “Mr. B”, and let’s call his network operations company, for lack of a better name, “Bandito Communications”.  Bandito Communications held a fairly sizable number of LACNIC IP addresses, some of which they used for their networks.  Mr. B wanted to sell his IP addresses, but due to LACNIC policies at the time, no one could directly buy them.  However, someone could buy the company, Bandito Communications, and all its operations, and acquire the IP addresses in the process, and Mr. B was willing to sell Bandito Communications.  This was a more complex and riskier transaction.  Buying entire companies involves a lot of due diligence and brings concerns about liability.  It wasn’t the kind of thing we could present to any of our clients.  But we were willing to entertain doing it ourselves.

We spent time negotiating price and terms via email and came to the outlines of a rough agreement.  Mr. B’s emails were a bit confusing and inconsistent, but we attributed that to our language barrier.  To actually consummate the deal, we hired a team of reputable Costa Rican corporate attorneys and flew down to meet with them in their offices.  We planned to go over the terms of the agreement with them and then meet with Mr. B the following day to close the deal.  The attorneys were thorough and had finalized our purchase and escrow agreements.  We wired the necessary funds to their escrow account.  They explained how Costa Rican company acquisitions worked and what paperwork we would need to finalize the purchase.

As we finished reviewing the paperwork, one of the attorneys confirmed that Bandito was a properly registered entity in Costa Rica and casually mentioned that it was incorporated the prior year.  Alarm bells started going off in our heads.  The IP addresses that were registered to Bandito Communications showed they had been registered in LACNIC’s database for over 5 years.  How could they belong to Bandito if Bandito was only a year old?  We showed the attorneys how to lookup IP address registrations in LACNIC and helped them dig deeper into the issue.  Then we found the answer.  Bandito Communications, the entity that held the IP addresses, was, indeed, a 5 year old company.  But the company on the purchase documents identified by its corporate registration number was Bandito Communicaciones (the Spanish word for Communications).  Bandito Communicaciones had no IP resources, had no customer networks, and was only 1 year old.  Mr. B had slipped it into the agreements late in the process when the attorneys asked him for his corporate registration number.  Mr. B was trying to pull a fast one.

We were furious.   The next day we were scheduled to meet Mr. B in a fine café at a city mall to execute the sale, and we considered cancelling the meeting and just going home.  But we had been working on this for months and had flown all the way down, so decided to keep the appointment and confront him with what we had learned.  Perhaps it was due to a misunderstanding on his end and could still be resolved.  Unlikely, but we were willing to give it a try.

We arrived at the café with our team of lawyers, all in our best business attire.  We impatiently waited, sipping coffee and trying not to spill it on our freshly pressed suits.  After 30 minutes passed with no sign of Mr. B, we were about to call it a day when a young, disheveled man in an untucked t-shirt approached and asked if we were there for the meeting.  We said we were and asked if he was Mr. B.  “No”, he replied.  “I’m his friend.  Mr. B doesn’t like to be seen in public and wants me to talk to you.”

“This is nuts,” we replied.  “We came here to close a deal with Mr. B.  Frankly, we have issues with the contract that we need to discuss with Mr. B face to face.  It’s ridiculous that he agreed to meet us here and won’t show himself.”

T-shirt guy shrugged.  “Yeah, that’s what I keep telling him.  He’s pretty stubborn though.”  Turns out T-shirt guy was pretty understanding.  But he had no direct ties to the company we were interested in purchasing.  He was just Mr. B’s buddy.  We told him to bring Mr. B to the meeting or the deal was off.  He left us and returned a few minutes later.  “Mr. B says he’ll meet with you, but he wants $5,000 down first.  If you give me $5,000, I’ll bring it to Mr. B and he’ll meet up.  He says it’s earnest money.”

By now we were apoplectic, and our high-priced attorneys were looking at each other like they had walked into the twilight zone.  We told T-shirt guy we weren’t giving him $5,000 and Mr. B better show up ASAP or we were done with him.  He shrugged and walked off.  Ten minutes later he returned with Mr. B in tow, a short, thin, middle-aged man dressed from head to toe in black.  A black hat, black suit, black shirt, black pants, black boots and even sporting a black beard.  We somehow made our introductions without engaging in violence.  Mr. B’s English was limited, so T-shirt guy and our attorneys helped translate.  We confronted him with the fact that he was trying to sell us a recently formed shell company, Bandito Communicaciones, that had no IP addresses, no network infrastructure or customers, and probably no assets at all.  “Ah,” he replied.  “I cannot sell you the other company, Bandito Communications, because we have too many customers doing good business there and using some of those IP addresses.  But most of those IP s we are not using and you can use them all you want.  We will help you and give you permission to use them.”

“Yeah, OK.  We’re going to pay you a king’s ransom for a worthless shell company and your promise that we can use some of your IP addresses.”  We ended the meeting and all further discussions right then.  A few weeks later we discovered a link to a social media page featuring none other than Mr. B himself, dressed in black, and surrounded by adoring followers of his spiritual presence.  It turned out Mr. B’s other occupation was leader of a fringe religious cult.  If this guy had successfully scammed us, we’d have never lived it down.

The whole escapade cost us a pretty penny in attorneys’ fees and travel expenses.  But at least we got to visit Costa Rica, and it was a beautiful country!