Monetizing IPv4 addresses / DiViNetworks

Fri Feb 7 10:37:21 UTC 2020

My apologies to all.  I previously posted here some inaccurate information,
which I must now retract and correct.

I incorrectly asserted that "DiViNetworks has received $15 million
USD worth of venture capital from the International Finance Corporation,
a commercial lender and member of the World Bank Group."

    https://ifcext.ifc.org/ifcext/pressroom/IFCPressRoom.nsf/0/52F1A9E272AAFAB785257BE80051CB53

In fact, a proper reading of the press release above indicated that IFC
only invested $5 million into DiViNetworks.

Other public reports however suggest that the company has received at least
$15 million USD in venture funding.  It is not immediately clear where the
additional $10 million USD might have come from.

    https://pitchbook.com/profiles/company/59066-56
    https://www.bizety.com/2015/09/10/cool-startup-divinetworks/

As seen at the pitchbook.com link just above, the company may have used
the following address as a U.S. business address in some instances:

    1680 Michigan Avenue, Suite 700
    Miami Beach, FL 33139

This location appears to be associated with "virtual office" rentals:

    https://www.davincivirtual.com/loc/us/florida/miami-beach-virtual-offices/facility-1149

On the company's own web site, it provides what would appear to be its one
and only business address:

    https://divinetworks.com/

    10153 1/2 Riverside Drive #526
    Los Angeles, CA

The above address would appear to be home to a business known as "Mailbox
Toluca Lake", which may or may not be a FedEx authorized shipping center:

   https://local.fedex.com/ca/los-angeles/61623/

The above addresses in Miami and Los Angeles would appear to be inconsistant
with other easly findable online documents, including the IFC press release
linked to above, which explicitly asserts that the company is located in
Israel.  It is not immediately clear why an Israeli company would have
need of either (a) a virtual office in Miami or (b) a mail drop in Los
Angeles.

I have been unable to find any evidence of any current or historical state-
level business registration for either "Divi Networks" or "DiviNetworks" or
"Divi Group" in either Florida or California.  The operation of business
addresses in either or both states without registration may possibly be a
violation of law in those states.  It is certainly impossible for any
business to file a state-level business tax return in any state in which
that business is not registered, due to the lack of the required state
business registration number which would have to appear on the tax return
in question.

As discussed in the IFC funding press release, the company appears to
have begun life with the eminently laudable goal to "increase Internet
transmission capacities and free up congested internet connections....
in 21 developing countries..."  This is certainly a commendable goal by
anyone's standards, and one fully worthy of funding from the commercial
lending arm of the World Bank.

That having been said, it is certainly within the realm of possibility
that this initial business model may perhaps not have stood the test
of time, and that providing services to developing economies may not have
produced sufficent returns to keep the enterprise viable on a long term
basis.

I have found at least some evidence to suggest that the company may, at
present, be pursuing a different business model.

In the current era, there are two ways in which any party who can beg,
borrow, or steal any large swath of IPv4 address can quickly and effectively
monetize those addresses.  (And these methods are not entirely exclusive
of one another.)

The traditional way of monetizing any large block of IPv4 addresses which
the lessor does not have, or plan to have, a long term interest in is
simply to sub-lease the addresses to snowshoe spammers.  Unfortunately for
those involved, if this strategy is pursued to the exclusion of any other
it renders the IP addresses in question a "wasting asset".  Their value
declines over time as they become ever more widely blacklisted and thus
ever more ineffective for spamming purposes.

An alternative monetization strategy which has become increasingly
prevalent and widspread in recent years and which does not, generally
speaking, engender this "wasting asset" problem (and which also,
conveniently, tends to attract entirely less public attention and
scrutiny) is to "dress up" the IP block(s) in question, to the extent
possible, via relevant RIR WHOIS records, in order to make them appear
to be networks containing only Internet end-user "eyeballs".  Specifically,
the term "residential" is typically used as an integral part of these
subterfuges, and a simple google search for "residential proxies" will,
at present, turn up a veritable plethora of companies offering as a
service exactly such fradulently "dressed up" IPv4 addresses, complete
with pre-configured proxy services.  (An alternative google search that
also gives a window into this little known world is "backconnect proxies".)

Above and beyond the amount of Internet-enabled mayhem and havoc that
proxies generally can give rise to, not to mention the violations of
law, the violations of the Terms of Service of various web sites, or
the manipulation of public sentiments (and thereby, perhaps, elections),
the dedication of entire blocks of now-scarce IPv4 addresses to proxies
whose only point in life is deceptive packet origination represents an
ongoing, growing, and colossal waste of this increasingly scarce resource.

In August of last year, both journalist Brian Krebs and myself became
acutely aware of one one such "residential" proxy seller whose supply
of IPv4 addresses was, to say the least, of dubious provenance:

    The Rise of “Bulletproof” Residential Networks
    Brian Krebs
    August 19th, 2019 
    https://krebsonsecurity.com/2019/08/the-rise-of-bulletproof-residential-networks/

So, you may well wonder, what are people actuallt using these dressed up
"residential" IP addresses for anyway?  And what is the significance of
the fact they the addresses in question are being used in conjunction
with proxy software?

In some cases, no doubt, the proxies and their associated IPv4 addresses
are being used for entirely innocent web browsing by people who have been
persuaded that evil forces are watching their every online move with
sinister intent, and that thus, they need to wear the Internet equivalent
of a balaclava whenever they go online.

In many and probably most other cases however, it is unambiguously true
that banks of "dressed up" IPv4 addresses, together with pre-configured
proxy software, are being used for less justifiable or forgivable purposes.

Specifically, personal monetary gain, by way of deception, appears to be
the primary current application of Internet proxies and their associated
IPv4 addresses.

At present, the Internet appears to be literally awash in "residential
proxies" available for rent.  These are NOT being pitched to persons
whose geographic locations and/or assocated oppressive governments are
preventing them from accessing YouTube or the New York Times or CNN web
sites.  Rather, these things are being very clearly and deliberately
pitched to potential renters who wish to exploit their unique properties,
en mass, as a stealthy and deceptive way to effectively "jump the line"
when it comes to purchasing limited distribution high end goods with the
intent to sell those purchased goods on the applicable secondary market.

Think ticket scalping.

That would be the primary use of these elaborate setups if it were not
for the fact that a rather different commodity which also appears in
limited quantities and which can also be resold at a profit on the
secondary market had not made its appearance in recent years -- high-end
limited edition sneakers.

As I have learned since last August, both Brian and myself actually arrived
rather late to this party.  There was and is an abundance of other coverage
of this shady phenomenon, both prior to Brian's blog post, and since:

    How Bots Are Making It Impossible to Get Your Hands on Hyped Streetwear
    By Scott Christian
    May 26, 2017
    https://www.esquire.com/style/mens-fashion/news/a55301/using-bots-to-buy-supreme/
    "The first bot prototype—basically patient zero for the current
    breed—was launched in 2012 in response to a release of the Air
    Jordan Doernbecher 9"

    How sneaker bots actually work
    Jun 7, 2017
    https://medium.com/@ayinope/how-sneaker-bots-actually-work-a016fd419646

    Inside the Wild World of Sneaker-Buying Bots
    by Ashwin Rodrigues
    Aug 14 2017, 6:00am
    https://www.vice.com/en_us/article/d33vpq/inside-the-wild-world-of-sneaker-buying-bots

    The War Against Sneaker Bots Peaked at the End of 2018
    By Cam Wolf
    December 26, 2018
    https://www.gq.com/story/war-against-sneaker-bots

    How Bots Ruined Buying Sneakers
    Tommie Battle
    Jan 24, 2019
    https://www.complex.com/sneakers/2019/01/how-bots-ruined-buying-sneakers

    Adidas and Nike shoes are more expensive because of ‘sneaker bots’
    By Darren Allan December 18, 2019
    https://www.techradar.com/news/adidas-and-nike-shoes-are-more-expensive-because-of-sneaker-bots

    Online sneaker drop cancelled thanks to bots
    Marc DeAngelis
    February 3, 2020
    Online sneaker drop cancelled thanks to bots

The important take-away from all of the above coverage is that brand name
high-end limited edition sneaker manufacturers are and have been wantonly
incompetent in their wllingness and/or ability  to create buyer registration
systems which would eliminate this absurd level of Internet gamesmanship.

As we speak, vast gobs of otherwise useful and increasingly scarce
IPv4 addresses have been turned to the exclusive purpose of gaming the
online purchase systems of these manufacturers.  These wantonly careless
manufacturers have creasted, on the Internet, nothing short of a clear
public nuisance, as well as a kind of artifically generated "tulip mania"
scarcity delirium which is now sucking time and talent out of otherwise
productive citizens who now devote their time, money, attention, and
effort into the utterly unproductive pursuit of the inherently limited
arbitrage opportunities that may exist between the primary and secondary
sneaker markets.

The sound you hear is a million man hours of labor and effort, along with
an unknown number of IPv4 addresses, all being flushed down the toilet in
the headlong pursuit of absolutely nothing of real or lasting value.

So, you may reasonably wonder, what has all this to do with DiviNetworks?

Well, it appears to me that in addition to, or perhaps instead of the
company's initial admirable goal of bringing better connectivity to
developing economies (funded by a World Bank loan), the company
may perhaps have also involved itself in the delivery of IPv4 address
blocks to another Tel Aviv company that sells... you guessed it...
"residential proxies":

    https://www.bestproxyreviews.com/netnut/
    https://www.bestproxyreviews.com/netnut/#divinetworks-powered

So, bottom line, it seems that we now have a situation where the World
Bank, a venerable international financial institution set up for the
express purpose of providing "loans and grants to the governments of
poorer countries for the purpose of pursuing capital projects" (ref:
Wikipedia) may in this instance instead be indirectly underwriting the
ongoing and further destruction of the world's remaining IPv4 address
supply, the looting of AFRINIC-managed IPv4 address blocks, and the
enrichment of the stockholders of Nike, Adidas, and other high-end 
sneaker maufacturers as they pursue their socially-destructive business
strategies, including but not limited to the creation of fevered and
overwrought markets for their own products based on their own artifically
engineered perceptions of scarcity and value.

Yessiree!  The World Bank certainly has a lot to teach those developing
economies about the true nature and essence of modern first-world
capitalism.  We can only hope that they do not learn this depraved
lesson on circular, self-serving and anti-social first-world buccaneer
capitalism too awfully soon.

Regards,
rfg