Domainer objects to Epik’s acquisition over Masterbucks collapse

A Los Angeles film production company and its domainer CEO have objected to Epik’s request to transfer its ICANN accreditation from the discredited former registrar Epik Inc to mystery new registrar Epik LLC.

Todd Ryan, CEO of American Business Capital Corporation and a domain investor, has written to ICANN to say that the transfer should be blocked until “all outstanding debts” are paid.

He’s particularly concerned with customers that may have been left out of pocket by Masterbucks, the payments service that has been described as a PayPal clone or simply a jumped-up Epik store credit system.

“The financial losses incurred by customers who utilized Masterbucks, a payment method provided by Epik registrar, are a matter of significant importance,” Ryan wrote.

“It is crucial that ICANN, as the governing body responsible for overseeing the domain registration industry, takes decisive action to ensure that all debts owed to these affected customers are satisfactorily resolved prior to any transfer of registrar accreditation,” he wrote.

Masterbucks was at the center of the old Epik’s financial mismanagement woes, with domainers beginning to complain that they couldn’t withdraw their funds almost a year ago.

Ryan says he’s a member of ICANN’s Business Constituency but does not say in his letter whether he’s owed money.

It’s not clear who currently owns the Masterbucks liabilities. The service was not believed to be part of the deal that saw the Epik registrar acquired from the Inc to the LLC last month.

ICANN’s head of compliance has written that it could take months for the Epik accreditation transfer to be approved (or otherwise).

Ryan also demands that ICANN disclose the identity of Epik LLC’s owners, which is still a bit of a mystery.

Epik lost 125,000 domains in Q1

Epik’s domains under management total fell by over 125,000 in the first quarter, March registry transaction reports reveal.

The company had 607,891 domains in its stable at the end of March, down from 732,914 at the start of the year. The number was down 40,000 in the month, almost double the decrease of February.

Most of the decline can be blamed on transfers — it had 27,721 names go to rival registrars in March and a net transfer loss of 26,658.

Epik had its worst month for newly registered domains too. Having regularly added 10,000 to 20,000 names a month last year, in March that had dwindled to about 2,000.

The company is known to have had troubles paying the largest gTLD registries, but it’s not clear whether this had an impact on its March numbers.

Epik peaked at over 800,000 domains under management before its financial troubles started to emerge last September. Last month it was sold to a mystery buyer which has vowed to turn its fortunes around.

Epik is off the ICANN naughty step

Epik is no longer in breach of its ICANN registrar accreditation agreement, but it remains to be seen whether its anonymous new owners can take over the contract, ICANN has said.

The registrar has paid its past-due fees, explained why it delayed its customers’ renewal requests and promised to put in place measures to ensure this kind of thing doesn’t happen again, ICANN Compliance chief Jamie Hedlund blogged.

This means Epik has dodged a contract suspension and gets to continue with business as usual, for now, albeit with many distrustful customers.

Hedlund wrote that ICANN is now reviewing Epik’s request to transfer its accreditation from Epik Inc to new entity Epik LLC, whose owners have yet to reveal their identities.

ICANN has to do due diligence on the buyer before approving the transfer, but Hedlund said this case is “complex” and is expected to take “several months”.

The LLC bought the old registrar for almost $5 million last month after a tortuous few months for customers claiming to be owed hundreds of thousands of dollars.

Some have speculated that the LLC is a front for Epik founder and former CEO Rob Monster, the person arguably most responsible for Epik’s woes over the last 12 months, but court documents published as part of a customer lawsuit include emails from Monster that suggest he was not involved.

Epik lost another 22,000 domains to transfers in February

Troubled registrar Epik saw another flood of outbound transfers in February, but the number was down on January.

The latest gTLD registry transaction reports show net transfers of negative 22,284 in the month, compared to minus 30,596 the previous month. There were 23,783 outbound transfers and 1,499 inbound.

The relatively improved net transfers number may reflect the shorter month, and possibly the emergence of problems Epik had actually executing transfers due to its serious cash flow problems.

Epik’s overall domains under management dropped from 684,691 to 648,092 over the course of the month.

The number of deleted domains was also down, from 20,363 in January to 16,591.

The company over the weekend said it has been sold to an undisclosed buyer for almost $5 million and that it has settled its registry debts and customer lawsuit.

Mystery buyer rescues Epik at end of crazy week

Limping registrar Epik isn’t out of the woods yet by a long shot, but its life became considerably easier late last week when a mystery buyer snapped up its assets for almost $5 million, enabling it to pay off many of its creditors.

The company said on Twitter that it had closed a deal that allowed it to pay off ICANN, which had filed a public breach notice just two days earlier, as well as various registries and loan providers.

It also allowed it to pay off Matthew Adkisson, the customer who was owed over $300,000 following a botched secondary market domain deal last year, who has now dropped his fraud and racketeering lawsuit.

Adkisson appears to have come away poorer, however, as the payoff seems to have only covered the money owed and not the probably substantial legal fees he has incurred since then.

The events of last week were pretty wild, including claims about literal assassination attempts, judging by court documents from Adkisson’s case.

Epik had told his lawyers that an “asset purchase agreement” for the Epik registrar was imminent, which would allow the company to settle its debts.

Disappointed with the offer, Adkisson filed for a temporary restraining order to prevent the sale, believing the money would wind up being squirreled away by the registrar’s current or former management.

That TRO disappeared when he withdrew his complaint and got paid at the weekend. ICANN, Identity Digital and Verisign all appear to have been paid at the same time, along with creditors called TVT and JJE.

The ICANN breach notice provides some poor optics for ICANN, which now looks like it only initiated Compliance proceedings in March, when its own registrar fees went unpaid, despite being aware of the many customer complaints against Epik.

However, now that the Compliance process has started, getting paid may not be enough to end it. The breach notice also refers to “several hundred” domains that were affected by Epik’s cash flow problems — it seems the company was unable to renew or transfer domains while in was in hock to the registries.

Adkisson’s docket contains several sworn declarations from customers saying they have lost important domains to others or been forced to spend thousands of dollars to move their domains elsewhere lest risk losing them.

While Epik cannot provide satisfactory answers to ICANN’s questions about these domains, its accreditation is still at risk.

Complicating matters, the new buyer will need to have the old registrar accreditation transferred to it, a process that takes time and subjects the registrar to a certain amount of ICANN scrutiny.

And the identity of the buyer is pretty mysterious.

On paper, the buyer is Epik LLC, a Wyoming corporation that formed about a week before the deal was finalized. Former Epik CEO Rob Monster has had to agree to change the names of operating company Epik Inc and parent Epik Holdings Inc to remove the “Epik” brand.

But the new LLC was created by a company called Registered Agents Inc, and the acquisition deal signed by its president, Jon Spear.

Registered Agents is a company that enables people to set up shell companies pretty much anonymously, and is often used by “[o]ligarchs, criminals and online scammers”, according to the Washington Post.

This is exactly the kind of association Epik does not need right now.

Making the new owners look even worse, an anonymous individual claiming to be a representative of the new Epik introduced himself or herself on the domainers forum Namepros at the weekend in probably the dumbest way imaginable if the company wants to claw back any credibility at all among what was once a core customer base.

The post does contain an apology to those “financially hurt” by Epik’s actions, and a commitment to “make things right for as many people as possible”, but it also contains several sideswipes at Namepros users, many of them victims of Epik’s mismanagement, calling their commentary “worthless”. It looks like the work of a troll.

In short, Epik still has a hell of a tough time ahead of it if it wants to shake off its bad reputation.

But before this article ends, I promised you some stuff about assassination attempts.

The material disclosed in the Adkisson case includes what appears to be a dense, multi-layered, rambling, paranoid conspiracy theory from Rob Monster, which draws in everyone from disgraced shock jock Alex Jones to Domain Name Wire editor Andrew Allemann (who hilariously Monster accuses of writing “hit pieces” about him).

I have to confess to being slightly disappointed that I didn’t get a shout-out.

He accuses people I’m not going to name here as secretly convening in late 2021 to discuss removing Monster from Epik by any means possible, with “lethal options” possibly on the table. He goes on to say:

For the record, I do have reason to believe that there have been attempts on my life including recently. This was the main reason why I stayed in Asia from January 20 through April 4 and maintained a heightened degree of privacy. I am in excellent health and not suicidal.

Monster, who I believe UK defamation law allows me to describe as “a bit of a character”, is known to frequently indulge in conspiracy theories, particularly with regards mass shootings (which feature in the theory outlined in his email to Adkisson’s lawyers).

Domainer asks court to block Epik sell-off

The customer suing Epik and its management over a fumbled $327,000 domain deal has asked a US court to prevent the company from selling off its assets and “absconding”.

Matthew Adkisson has amended his fraud complaint, first filed in March, to demand an injunction:

enjoining Defendants from transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of Adkisson’s Escrow Funds and any other amounts owed to Adkisson, including but not limited to by transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any of Defendants’ assets or companies that Adkisson’s Escrow Funds were used in connection with

The amendment follows tweets from current Epik CEO Brian Royce which strongly suggested the company is in the process of selling off its assets. The complaint quotes former CEO and majority shareholder Rob Monster as confirming a sale was being “finalized”.

“If Royce, Monster, and Epik are allowed to sell Epik or its assets, consumers like Adkisson are highly unlikely to be repaid for the funds that Royce, Monster, and Epik and misappropriated,” the complaint says.

Adkisson attempted to buy the domain nourish.com via Epik and its “escrow” service last year, but after the sale fell through the company did not return his money. He now claims Epik was illegally mingling its escrow funds with its general operations fund.

The amended complaint now includes several citations from TrustPilot — other customers who says they bought domains only to see Epik take their cash and not hand over the domain.

While Epik has admitted that it owes Adkisson money, it has otherwise denied any wrongdoing. After the amendment, Royce withdrew his motion to dismiss the case.

Epik exodus topped 100,000 domains in January

Epik lost tens of thousands of domains under management in January, as customers spooked by the company’s financial troubles transferred their names to other registrars.

The latest registry transaction reports show a net transfer loss of 30,596 domains in the month, with 32,287 outbound and 1,691 inbound transfers. That’s a pretty big leap up from December, where the net loss was 20,687 names.

For comparison, that’s second only to GoDaddy, whose primary accreditation had almost 66 million domains and just 63,943 outbound transfers in January.

The total number of outgoing transfers between September, when Epik’s current management took over, and January, is over 100,000.

Epik’s DUM has slid from 792,554 at the end of September to 684,691 at the end of January.

New domain creates have also fallen off a cliff. Having reliably added a low five-figure number every month last year, Epik added just 5,158 new domains in January, less than half as many as December.

The exodus began when customers started reporting problems taking money out of their accounts and allegations of financial mismanagement emerged. Hundreds of thousands of dollars, at least, are owed, and there’s at least one customer lawsuit.

We’re very much in run-on-the-bank territory.

None of these numbers include ccTLDs, for which data is not available. The gTLD numbers are delayed by three months due to ICANN policy.

Epik CEO tries to wriggle out of $327,000 refund lawsuit

Epik CEO Brian Royce has filed a motion to dismiss a lawsuit against him, as the company denies it defrauded a customer out of $327,000 in a botched domain purchase.

Royce was named alongside Epik companies and former CEO Rob Monster in a legal complaint last month by customer Matthew Adkisson, who had tried to buy the domain nourish.com through Epik’s escrow service.

But Royce says he should be removed from the list of defendants because he wasn’t employed by Epik when the deal was inked last May. He became CEO in September 2022, after Monster stepped aside.

The motion to dismiss was filed as the companies — Epik, parent Epik Holdings, and sister company Masterbucks — simultaneous denied the allegations of fraud and racketeering, while admitting they still owe Adkisson money.

Epik admits Adkisson paid $327,000 for the domain, that he never received the domain, and that he is still owed a refund:

Defendants admit that the domain name has not been transferred to Adkisson. Defendants additionally admit that they intended, and still intend, to return Plaintiff’s funds that he had paid for the purchase of the domain name

…

Defendants admit that Epik owes Adkisson a refund of the $327,000 in funds he previously transferred to it

Monster, who is also named as a defendant and remains Epik’s majority shareholder, has not yet filed his answer to the complaint with the court, according to PACER records.

Epik’s meltdown is a ticking time-bomb for ICANN

There are many ways ICANN could eventually wind up shutting down flailing registrar Epik, but it might face a nightmare of its own when it does.

Epik appears to have been suffering from serious cash-flow problems for the last several months, with some customers still complaining this week that they haven’t been paid money owed as far back as September.

It’s facing a lawsuit by a customer who says he’s owed over $300,000 over a failed domain purchase, accusations that it’s been running its escrow service without the proper paperwork, and claims that current and former executives may have “embezzled” customer money.

It’s an absolute dumpster fire that so far shows little sign of being extinguished, but unfortunately there’s very little about the situation that appears to be in ICANN’s Compliance wheelhouse.

ICANN Compliance has the right to terminate a company’s accreditation — its ability to sell gTLD domains — if that registrar breaches the terms of the Registrar Accreditation Agreement that all registrars must sign.

The RAA does not cover the secondary market, or escrow or store credit services like Epik’s doomed “Masterbucks”.

Ironically, ICANN would stand a better chance of shutting Epik down if its Whois service crashed, or if the registrar for some reason failed to publish an abuse contact on its web site.

However, if Epik is treating its ICANN fees the same way customers say it’s treating their funds, it can expect a nastygram or six from Compliance, if it has not done so already.

Most cases where ICANN ultimately terminates a registrar’s accreditation begin when Compliance gets a note from the bean-counters that somebody hasn’t been paying their quarterly invoices.

Typically, this serves as a tip-off that the registrar is having problems, so Compliance audits the company to see where else it might be in breach, often discovering other minor or major infractions it can add to the docket.

Epik paid ICANN just shy of $150,000 in its last-reported fiscal year to June 30, 2022. If its current cash-flow problem has caused it to miss an ICANN payment in the three quarters since then, Compliance could be another very powerful creditor knocking at its door.

Another way ICANN could bring out the deaccreditation hammer is if Epik suffers unfavorable court rulings related to financial mismanagement. The RAA specifically allows termination if a court finds a registrar committed “fraud” or “a breach of fiduciary duty”.

The customer lawsuit Epik is currently facing could make such a finding, if it reaches trial and things don’t go Epik’s way.

Perhaps a more immediate concern is that the RAA contains another clause allowing termination if a registrar “is disciplined by the government of its domicile for conduct involving dishonesty or misuse of funds of others”.

I am not a lawyer, but I can see an argument being made that this might have happened already.

As Domain Name Wire reported in February, the Insurance Commissioner of Epik’s home state of Washington recently fined the company $10,000 for selling its DNProtect service as an “insurance” product without the proper licences.

Does this count as being “disciplined by the government of its domicile for conduct involving dishonesty”? Legally, I don’t know.

DNW reports in the same article that the Washington state attorney general has been tipped off about Epik’s escrow service, which is also a regulated industry in which Epik apparently does not have the necessary paperwork to operate.

I’m soothsaying here, of course, but any future disciplinary action from Epik’s local AG could well give ICANN Compliance another deaccreditation trigger to pull.

There are multiple excuses Compliance could find to shitcan Epik over the coming months, but let’s look at the downside for ICANN if it does.

Epik has built itself up in recent years as the go-to “free speech” registrar. It’s welcomed, even courted, multiple registrants that have had their domains banished from other registrars for their sites’ controversial content.

That pretty much always means “far-right” content, of course.

Most recently, it took the business of kiwifarms.net, a forum accused of allowing member to doxx and issue death threats against transgender rights activists.

It’s previously been associated with domains for similarly controversial registrants including Andrew Tate, Infowars, 8chan, Gab and The Daily Stormer.

When Monster was replaced by current CEO Brian Royce last September, the company made a big deal about how the new guy and the old guy were aligned on the free speech issue. Royce has subsequently echoed those thoughts.

Given the narrative Epik has created around itself, can you imagine how a certain section of the online public, namely the fringe of the American right-wing, would react if ICANN essentially shut down the “free speech registrar”?

ICANN has for many years faced misinformed criticism that it has the power to take down web sites it does not agree with, that it acts as a gatekeeper for the internet, that it is or risks becoming the internet’s “content police”.

If ICANN were to deaccredit Epik, removing its ability to sell most domain names, it would be incredibly easy to construct a narrative that a bunch of Californian liberals are trying to destroy “free speech” by taking down loads of right-leaning web sites.

It wouldn’t be true, of course, but the notion would only need to be propagated by a clueless Congressperson, a disingenuous podcast host, or a sustained social media campaign, before ICANN’s very raison d’être came under focus by people who don’t particularly care about facts.

Epik customer exodus started when Monster quit

Domain registrants started leaving Epik in droves when CEO Rob Monster quit last year and serious allegations of financial mismanagement emerged, an analysis of the numbers shows.

Epik’s total gTLD domains under management began to free-fall in September 2022, dropping by more than 70,000 by the end of the year, almost all as a result of customers transferring their domains to other registrars.

Data from registry transaction reports I compiled shows Epik peaking at around 808,000 domains across all gTLDs at the end of August, having gone up every month that year.

But DUM started tumbling when Monster quit and customers started reporting problems extracting funds from their accounts in mid-September. Epik dropped to 792,000 domains that month, with 780,000 in October, 767,000 in November and 733,000 at the end of the year.

Transfers from Epik to other registrars also went up in September, almost doubling from the 9,500 domains reported in August to 16,000, a level of customer bleed it maintained until December, when it rocketed up to almost 23,000.

Most of the losses were of course in .com, but .net, .org and .xyz also saw big downsides.

The drop in revenue won’t help the company extract itself from its current dire straits. It’s publicly admitted it’s having difficulty paying its customers, some of whom complain they’re owed tens or hundreds of thousands of dollars.

Epik is facing a customer lawsuit, the prospect of a probe by its local state attorney general over its unlicensed escrow service, and recently had to shut down its unlicensed “insurance” service after a settlement with the Washington state insurance regulator.

Whoever runs its Twitter account has been pointing the finger of blame at Monster, saying the company, which it refers to as “Epik 2.0” is trying to move “out of a monster’s shadow”.

In recent days it’s tweeted reassurances that customers will eventually be made whole, legal threats against Monster (believed to still be non-executive chair) and, yesterday, expressions of a desire to “connect” with Monster and explore “alternative paths”.