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.

Tucows and GoDaddy see weakness in big-ticket aftermarket sales

Two of the industry’s largest registrars saw weakness in their first-quarter revenues which they attributed largely to a lack of high-priced secondary market sales.

This lumpier and less-predictable side of the market saw Tucows overall domains revenue down 4% in the period, while GoDaddy saw its “core platform” revenue down a million bucks or 0.2%.

GoDaddy said a 5% increase in domains revenue was “offset by tough compares for our aftermarket business as well as the continued uneven flow of large transactions.”

Tucows said it has “experienced a weaker aftermarket for domain sales, most notably at the higher end of the price range”.

GoDaddy’s core services revenue was down to $698 million from $699.6 million a year ago. Overall revenue was $1.036 billion, up 3.3%. Its net income was down 30% at $47.4 million.

Tucows’ overall revenue was down 0.8% at $80.4 million, with a net loss of $19.1 million compared to a loss of $3 million a year ago.

Another registrar seemingly vanishes

An accredited registrar appears to have gone bust after its parent company failed.

ICANN has sent a breach notice to Nimzo 98, which while registered as an LLC in the US appears to be Indian-operated, saying the company has not paid its fees and the Compliance folk haven’t been able to reach management since December.

The notice also complains that the company isn’t providing a Whois service as required, which may be a polite way of saying that the entire web site is down — it’s not resolving properly for me.

Digging into the data a little, it seems Nimzo was the in-house registrar of a company called Houm that, according to its press releases, was operating some kind of privacy-oriented social network slash cloud storage service.

Part of Houm’s offering was a personal domain name, which came bundled as part of the monthly service fee.

When Houm seriously started promoting its service last year, it appears to have led to a spike in registrations via Nimzo. Most of its domains were concentrated in new gTLDs such as .live, .xyz, .earth, .world and .space.

Having consistently registered no more than a couple hundred gTLD names per month for years, there was a sudden spike to over 5,000 in July and 12,000 in August, peaking Nimzo’s total domains at 21,000 that month.

But then, in October, the registrar deleted almost all of its names. It went from 21,000 domains under management in August to 190 at the end of October. These were not grace-period deletes, so fees would have been applicable.

Houm’s web site at houm.me also appears inoperable today, showing a server error when I access it, and its Twitter account has been silent since last August.

ICANN has given Nimzo until May 22 to pay up or lose its accrediation.

.hiphop returns to GoDaddy after Uniregistry snub

The new gTLD .hiphop is back on GoDaddy’s storefront, more than six years after the company stopped carrying it in a controversy over prices.

Dot Hip Hop, which took over the registry from UNR (formerly Uniregistry) last year, announced the deal in a press release today.

The exposure should be good for the TLD, which has barely scraped together net growth of 400 domains since its relaunch with new drastically reduced pricing a year ago.

It currently has barely over 1,000 names in its zone file. It had about 650 this time last year.

GoDaddy is not nearly the cheapest place to grab a .hiphop, with its web site showing a retail price of $44, compared to about $25 at Namecheap and $35 at Hover.

.hiphop was on of 23 gTLDs managed by Uniregistry kicked out by GoDaddy in 2017 after Uniregistry massively increased its pricing without grandfathering on renewals.

A lot of those gTLDs are now owned by GoDaddy, after UNR sold off its portfolio two years ago. Ten that were acquired by XYZ.com do not appear to have returned to the leading registrar.

Most of the nine former UNR strings owned by newcomer and management successor Internet Naming Co also appear to be back on GoDaddy, apart from .forum, .hiv and .sexy.

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”.

Epik sued over financial meltdown

Domain registrar Epik has been sued by a customer who says he is owed $327,000 over an aborted secondary market purchase.

Matthew Adkisson says he paid the sum to Epik to buy the domain nourish.com from a third-party seller, with Epik paid $27,000 for its escrow service.

However, Adkisson alleges, the sale fell through and when he asked Epik for his money back he was given the runaround for months.

His lawsuit describes a scheme whereby Epik, former CEO Rob Monster and current CEO Brian Royce were using supposedly escrowed funds for general corporate — and possibly even personal — purposes.

There are even alleged Ponzi-like elements, with funds from new customers being used to pay off debts to former customers.

The suit describes it as a “widespread and illegal fraudulent scheme — replete with misrepresentations, embezzlement, and misappropriation”.

Similar complaints of this nature have been made against Epik for months, with many buyers and sellers struggling to get paid.

The suit, which suggests it believes some of Epik’s actions may have been criminal, lists eight counts including breach of contract, fraud and racketeering. Adkisson wants his money back, as well as unspecified damages.

You can read the complaint here (pdf). Hat tip to John Berryhill.

Euro registrars merge to form Your.Online

French registrar Gandi and Dutch registrar holding group Total Webhosting Solutions have announced they have merged to form a new company, Your.Online.

The combined entity says it has a million customers, revenue of €175 million ($183 million), and 600 employees.

Your.Online will operate eight brands, mostly in hosting. Gandi will remain as an independent brand under the new corporate umbrella. The TWS brand appears to have been retired.

Financial terms of the deal between the two private companies were not disclosed.

Gandi founder Stephan Ramoin will become the group’s non-executive chairman of the firm’s advisory board. Your.Online is helmed by Abe Bakker

I think today might be the first time in 25 years of reporting that I’ve seen the word “bullshit” in a press release.