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Top Stories: Private equity company acquires .Org

by — Policy & Law 4 Comments

Ethos Capital acquires .org for $1.135 billion.

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The biggest shock to many people in the domain industry in 2019 was Ethos Capital acquiring the .org registry contract from Internet Society for $1.135 billion.

The deal was announced soon after ICANN removed price caps on .org domains, meaning that Ethos can charge whatever it wants when people register or renew a .org domain.

Non-profits, including some of Internet Society’s own chapters, are obviously upset about this. So are registrars and registrants.

The deal was put in motion by former ICANN Fadi Chehadé. He left ICANN and joined private equity company Abry Partners as an advisor. He advised the company on its acquisition of Donuts. On the Abry side, partner Erik Brooks worked on the Donuts deal and became a board member. Then Fadi advised Brooks on acquiring .org, which Brooks is running through Ethos.

That the former ICANN CEO is now profiting from the industry he oversaw (and some of the things he put in place) leaves a bad taste in many peoples’ mouths.

For its part, Ethos has said what it needs to say to get the deal done. It will maintain reasonable prices. It will work with the community on their concerns about censorship. It plans to hold this investment for a long time.

But, so far, none of this is contractual. Once ICANN gives the green light, Ethos can do whatever it wants. It can flip the registry in a year for more money. It can raise prices as high as it wants to.

ICANN has postponed its approval, but I expect this deal to ultimately go through.

It won’t be the end of the world as long as Ethos and subsequent owners keeps prices in check. If it doesn’t, the stability of the DNS will be impacted.

.Com prices are going up after Verisign pays off ICANN

by — Policy & Law 17 Comments

Verisign will put $20 million in the kitty in return for multi-billion dollar windfall.

Verisign logoLast year I made a prediction in my annual predictions podcast: ICANN would let Verisign (NASDAQ: VRSN) raise prices on .com, but Verisign would pay it extra money for the right to do so.

That’s the crux of a proposed agreement between the two parties.

The agreement would allow Verisign to increase prices by 7% in each of the last four years of each six year contract renewal. This is in line with an agreement Verisign struck with the U.S. government to amend the Cooperative Agreement. The wholesale price of a .com should increase from $7.85 to $10.26 over the next four years, and registrars will add their own markup.

In a carefully worded press release, the parties noted that ICANN is not a price regulator and is deferring to the U.S. government on .com prices. Historically, ICANN has been a price regulator, but it recently abdicated this role for some reason.

Now, about that payoff. ICANN is facing a budget shortfall after growing and expanding rapidly in recent years. The correct thing to do would be to trim the fat, but the Verisign contract renewal gave ICANN an easy opportunity to incresae revenue. Verisign will pay it an addition $20 million over the next five years as part of its new agreement. Problem solved.

Given some of ICANN’s recent decisions, this should come as no surprise.

Top stories: Dead people get domain names

by — Policy & Law 3 Comments

Four famous people got their domains posthumously in 2019.

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Some of the most popular stories on Domain Name Wire are about famous people. In 2019, four famous people got control of key domain names posthumously. (OK, so really it was their heirs that got the domains.)

In early 2018, Prince’s estate became the owner of Prince.com. The estate had sued Domain Capital over the domain name and Domain Capital countersued for reverse domain name hijacking. The parties settled in 2019, and part of that settlement was to transfer the domain.

Michael Jackson’s estate got control of the domain KingofPop.com in 2019 as well. It sued Gourmet Gift Baskets in 2016, claiming its use of the domain and brand for selling popcorn was infringement. The parties settled, but apparently the estate gave the gift basket company time to transition to a new domain and brand.

To other famous dead people got their domains through UDRP.

First, a company called Escobar Inc. won the domain name PabloEscobar.com. The company is apparently run by some of the late drug kingpin’s relatives.

Second, The Steve Jobs Archive, LLC won the domain name SteveJobs.com (check to see if transferred)

4 U.S. lawmakers question .Org sale

by — Policy & Law 12 Comments

Presidential candidate Elizabeth Warren among those concerned about sales of .org registry.

Signatures of four U.S. Senators who are questioning the deal to sell .org, including Elizabeth Warren

Four Lawmakers sent a letter with questions about the sale of .org to Ethos Capital.

Three U.S. Senators and a U.S. Representative have sent a letter to Ethos Capital, Internet Society and Public Interest Registry questioning the decision to sell .org to Ethos.

Ron Wyden, D-Ore., Richard Blumenthal, D-Conn., and presidential candidate Elizabeth Warren, D-Mass., with Rep. Anna Eshoo, D-Calif. sent the letter that includes nine questions about the proposed sale.

Among the group’s concerns are:

  • Censorship
  • The potential that .org will move jurisdictions outside the United States
  • How prices will be controlled
  • How the proposed .org stewardship council will work, and if it will have veto power of decisions such as pricing

The Senators and Respresentative also want the registry transfer request and answers to ICANN’s latest questions to be made public.

Future Media Architects sues Akin Gump, claims malpractice

by — Policy & Law 9 Comments

FMA, once one of the domain industry’s most revered domain investors, sues its former attorneys.

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For years, Future Media Architects was known in the domain name industry for owning a portfolio of high-quality domain names—and for never selling them.

People knew the company’s founder, Thunayan Al-Ghanim, as Elequa. He was somewhat of a mystery man, but domain investors envied his portfolio.

Then, earlier this decade, Future Media Architects (FMA) started selling domain names. It was difficult to get a picture of what changed. It became clear that there was a family struggle over the company, which Thunayan co-owned with his sister Shareefah.

A new lawsuit (pdf) sheds more light on what has happened in the interim, and alleges that law firm Akin Gump took advantage of both Thunayan and FMA. As Thunayan allegedly suffered from substance abuse and mental health problems, Akin Gump began representing both him personally and FMA, according to the suit.

In addition to this troubling dual role, the lawsuit alleges that Akin Gump and its employees then undertook a series of bizarre transactions and relationships to its financial benefit. The suit states:

Akin Gump’s transgressions included: FMA-funded family vacations for Akin Gump personnel; the personal expenses of an Akin Gump attorney and her family members were paid for by FMA; numerous bank accounts were held jointly by an Akin Gump lawyer and Thunayan; jobs at FMA were given to the family members of an Akin Gump attorney, one of whom was directed by Akin Gump lawyers to live and travel with Thunayan; the unauthorized transfers of hundreds of thousands of dollars to accounts and entities jointly owned and/or run by an Akin Gump lawyer; establishing shell companies which were jointly owned and controlled by an Akin Gump lawyer; and the sale of some of FMA’s most valuable domain names in rushed and below-market transactions.

Those rushed domain sales included bit.com for $300,000 and 333.com for $750,000, according to FMA. Akin Gump billed FMA for advising on these sales while paying a commission to Uniregistry to facilitate them, the suit says.

FMA believes these sales were rushed through in order to generate cash to pay Akin Gump. In fact, an Akin Gump attorney used access to FMA accounts to pay some of the bills, the suit alleges.

The complaint says the law firm helped Thunayan open special purpose entities and bank accounts, some of which Akin Gump employees were able to control.

Heidi Liss, who was Senior Counsel for the firm, formed companies such as Accubon LLC and Vista Global Advisors, LLC, according to the lawsuit. The latter’s website states:

We provide bespoke consulting and advisory services to international private clients and their professional advisors. Through our global network, we provide customized solutions to protect wealth and provide for future generations.

In 2015, Accubon, which was owned by Liss, entered into a consulting agreement with FMA, the suit states. According to the the lawsuit, the agreement installed Liss as FMA’s interim CFO and member of FMA’s executive management team. The lawsuit alleges that Liss subsequently transferred funds from FMA entities to Vista Global. FMA also paid off Liss’s and her daughter’s credit card bills in 2015 for charges including hair cuts, Broadway tickets and a purchase at Nordstrom, according to the lawsuit.

The lawsuit alleges that Liss worked with Akin Gump lawyers to get her daughter hired as Thunayan’s personal assistant at an annual salary of $120,000.

Akin Gump also represented both Thunayan and FMA on both sides of a $3 million loan between the two parties to purchase a condo in Cayman Islands, according to the lawsuit.

FMA is seeking damages in excess of $20 million.