
ICANN races towards regulatory capture: the great .org heist - fanf2
http://blogs.harvard.edu/sj/2019/11/23/a-tale-of-icann-and-regulatory-capture-the-dot-org-heist/
======
et2o
Looking at the only two members of “Ethos Capital” (ironic name)

1) CEO: A Harvard MBA with typical PE experience

2) “Chief purpose officer” - Former SVP at ICANN responsible for corporate
outreach.

The structure of this stinks. I’d be not at all surprised to learn of some
kind of back channel dealing.

Edit: The former (2016) CEO of ICANN registered ethoscapital.com? After ICANN
he went to the former PE firm of (1) above. He is certainly involved in this
now, even if not named.

Unbelievable. This heist was planned for years with money raised specifically
for it. I can’t believe this is legal.

~~~
bhickey
> I can’t believe this is legal.

I doubt that it is. The directors of a non-profit can't wake up one morning
and decided to pillage the org's resources for their benefit. They must
transact their business at arm's length. Chehadé buys Donuts from Nevett,
Nevett turns around and sells dot-org to Chehadé's PE firm. This looks like a
kickback scheme.

PIR is headquartered in Virginia, we should be calling and writing to the
Attorney General there.

~~~
bhickey
I spoke with the operator at the AG's office. This is regulated through the VA
Dept of Agriculture and Consumer Services. I was instructed to file an
ordinary consumer complaint with VDACS and it will get escalated as
appropriate.

~~~
kelnos
Any idea _how_ to do this? I googled "VA Dept of Agriculture and Consumer
Services consumer complaint", which took me to
[https://www.oag.state.va.us/consumer-
protection/index.php/fi...](https://www.oag.state.va.us/consumer-
protection/index.php/file-a-complaint) \-- but that looks like the AG's
office.

~~~
brylie
Peehaps use this form?

[http://www.vdacs.virginia.gov/doc/complaint.docx](http://www.vdacs.virginia.gov/doc/complaint.docx)

------
m12k
This is one of those situations that really encapsulates the essence of IP for
me: There is something virtual (the .org tld) that comes with legally enforced
scarcity and a monopoly that governs it. And some guys realize that you can
acquire this monopoly cheaply, and milk it for massive profit, at the expense
of millions of people. It's not even like there's some investment that needs
to be done, some new fancy tech around tld's that need to be funded - it's
just a plain as day money-grab, rent-seeking in its most obvious form.

~~~
swiley
My understanding is that running resolvers at the kind of scale they need to
handle attacks is actually difficult and expensive. The registries themselves
are just a couple of machines with databases on them.

Maintaining namespaces is just hard and the DNS, with groups of people running
TLDs, is the best we’ve come up with so far. I personally thought namecoin was
a creative alternative and I’m a little disappointed it hasn’t become more
popular but until something like that does we’re going to continue seeing
things like this.

~~~
dmos62
> DNS, with groups of people running TLDs, is the best we’ve come up with so
> far.

Is it? I'm not very familiar with the domain, so I'm actually asking.
Generally, I'm very cautious when someone says that current state of affairs
is the best we have come up with, because it doesn't acknowledge the inertia
to keep things as they are.

~~~
dangerface
No, there are properly decentralised domain name projects like namecoin which
uses blockchain to control ownership of domains and zone edits in a more
secure way.

There are a few other projects that decentralise domains and fix security
issues, but our current federated system has become a heavily established
billion dollar industry and the people in control of it have no incentive to
give up that control.

Any move to a new system will have to come from end users who don't know there
are issues, and don't care enough to spend the effort understanding the issue
and solution.

~~~
DonHopkins
As if a den of evangelical blockchain shills would run the domain name system
any more ethically, responsibly, and transparently than the current bunch of
old school shysters running it, if only they'd hand over the reigns of control
to the new blockchain shysters and make them God. Slapping the "blockchain"
buzzword on everything doesn't solve any problems, it just makes you look like
yet another con-man.

[https://en.wikipedia.org/wiki/Namecoin](https://en.wikipedia.org/wiki/Namecoin)

>A 2015 study found that of the 120,000 domain names registered on Namecoin,
only 28 were in use.

An empirical study of Namecoin and lessons for decentralized namespace design

[http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.698...](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.698.4605&rep=rep1&type=pdf)

>Based on all the empirical evidence we present, we are left to conclude that
the Namecoin ecosystem is dysfunctional. The vast majority of registered names
represent squatting and there is little evidence of a secondary market for
names. While there could be many factors that explain the lack of adoption,
there appears to be clear room for improvements in the design to minimize
squatting and other problems. To this end, in Section 6, we explore the design
space of decentralized namespaces and make recommendations.

Why Namecoin Didn't Take Off: A Cautionary Tale

[https://cointelegraph.com/news/why-namecoin-didnt-take-
off-a...](https://cointelegraph.com/news/why-namecoin-didnt-take-off-a-
cautionary-tale)

>Cointelegraph: You used to be one of Namecoin's biggest cheerleaders. What
happened?

>Michael Dean: So here's my opinion, which is really going to get me hated,
but I think Namecoin as a decentralized DNS-type system is dead.

>[...] The biggest flaw is the clunky wallet that takes ten minutes to open.
The other biggest flaw is that the near-zero expense of registering domains
encouraged domain squatting. All the good names are taken. Someone registered
every noun in the dictionary as Dot-Bit.

>And these squatters didn't even do it right. When you go to any of these
squatted domains, they don't go to a place holder with a page that says "to
buy your site in Dot-Bit, email me here and make me an offer." The sites just
don't resolve! These people are unclear on the semi-scummy concept of domain
squatting. In Namecoin, even that gets done wrong!

>Also, Dot-Bit is actually vulnerable to a hostile takeover from ICANN. If
ICANN decided to support Dot-Bit and decide where things would resolve
contrary to where the Namecoin wallet was resolving things, and corporate DNS
servers sided with the ICANN (which they largely would), it would create
consumer confidence chaos with the Namecoin system.

~~~
dangerface
You are getting a bit evangelical there.

I'm not an advocate for blockchain it has only one very narrow use case global
distributed consensus on ownership of a virtual token that's perfect for money
and domain names and nothing else.

I'm sorry if you bought some flim flam mans marketing spin but I only ever
look at the tech.

All of these issues with people not using their domains just backs up my
argument, that people don't care enough to use it, hell even the squatters
don't care enough to use it.

Ultimately ICANN could have given them the TLD but didn't because they have no
incentive to give up that control.

Thank you for backing up my argument with links :)

~~~
DonHopkins
>I'm sorry if you bought some flim flam mans marketing spin but I only ever
look at the tech.

What made you think I believed any bullshit, or that I'm evangelizing? What
company did I endorse? And the links prove you're evangelizing Namecoin as a
"properly decentralised domain name project", but it's actually a complete
failure, which you conveniently neglected to mention. Your statements are the
exact opposite of the truth. Speak for youself, and stop projecting.

You claimed that Namecoin was "properly decentralised" and "uses blockchain to
control ownership of domains and zone edits in a more secure way". Yeah, all
28 domains in use. You're the one evangelizing a spectacular failure.

~~~
dangerface
> You claimed that Namecoin was "properly decentralised" and "uses blockchain
> to control ownership of domains and zone edits in a more secure way". Yeah,
> all 28 domains in use.

Yes that was my argument, we are both in agreement why are you so upset?

~~~
DonHopkins
I'm not at all upset (and you're projecting again) -- I'm being sarcastic, and
it whooshed right over your head. Look up: All 28 domains. Why didn't you
point out what a failure it was in your argument (which has already been
severely downvoted), unless you were being disingenuous when you evangelized
Namecoin as a properly decentralised more secure solution, and not a failed
improper insecure vulnerable dead dysfunctional boondoggle, as my quotes and
citations proved?

~~~
dangerface
Read dmos62's comment and my response again.

I mention namecoin as a single example of decentralised dns and mention that
there are other projects (thats not advocating or evangelising namecoin).

I then point out the major problem with all of these alternative dns, no one
uses them because few have incentive to do so.

You responded by calling me a con-man (sounds reasonable) because I had the
audacity to mention a technology in one of the only use case's its good at.

> I'm not at all upset (and you're projecting again) -- I'm being sarcastic,
> and it whooshed right over your head.

I got the sarcasm, I got the name calling, it's childish. If I got more
upvotes would you consider my words instead of the con-man image you are
projecting? I don't think so.

------
tszyn
Already in 2015, Emily Taylor warned [1] that ICANN could become the
Internet's FIFA -- a small organization with great power that doesn't answer
to any government. Here we are. A private company run by former ICANN people
will be given the right to collect massive rent from a locked-in client base
on a public resource.

[1] [https://www.theguardian.com/technology/2015/sep/21/icann-
int...](https://www.theguardian.com/technology/2015/sep/21/icann-internet-us-
government)

~~~
C1sc0cat
It was already obvious in the 2000's the analogy with FIFFA is a good one as
its the some of the playbook ICANT are using holding meetings in out of the
way places and leveraging small countries to maintain power.

BTW I was a member of poptel who owned the .coop registry.

------
scandox
From a linked source [1]:

> Vint Cerf, former Chairman of the Board of ICANN and founding President of
> the Internet Society, said in a statement: “When the Internet Society won
> the bid to operate the .ORG registry, it enabled a productive and
> sustainable future for the organisation. Public Interest Registry exercised
> its stewardship to the benefit of the registrants and the Internet Society’s
> mission. I am looking forward to supporting Ethos Capital and PIR in any way
> I can as they continue to expand the utility of the .ORG top-level domain in
> creative and socially responsible ways.”

And then an outline of what "expand" might mean in that context:

> Going forward, PIR and Ethos Capital are planning to launch several new
> initiatives aimed at promoting and supporting the .ORG Community, including:
> Establishing a Stewardship Council that will serve to uphold PIR’s core
> founding values and provide support through a variety of community programs;
> Launching a Community Enablement Fund to support the financing of current
> and additional initiatives undertaken by key Internet organisations; and
> Expanding a program to award .ORG prizes to promote the success and positive
> impact of non-profit organisations.

Which is surely the most transparent flimflam imaginable and which anybody in
the business world would interpret as doing absolutely nothing at all. /s I
can't wait to see the fabulous prizes /s...

[1] [http://www.domainpulse.com/2019/11/14/pir-eyeing-growth-
etho...](http://www.domainpulse.com/2019/11/14/pir-eyeing-growth-ethos-
capital-takeover/)

~~~
0x0
What happened here? Did Vint Cerf become a villain?

~~~
syshum
Power Corrupts, sometimes with out the people even knowing they have been
corrupted

Most of the time people do not see themselves as the villain, even those
committing a fraud find all kinds of way to justify their actions

~~~
JoeAltmaier
Yes, like politicians that spend their careers compromising on every issue to
keep in office, so they can press their serious issue they care about. And
find a 20-year career has passed and they never did it.

People live one day, one decision at a time. Without a clear 'mission
statement' and a clear knowledge of the risk carried by each decision, we all
tend to be very conservative. Which means, support the status quo for now in
hope of better change in the future. Which might never come.

------
gorgoiler
It doesn’t really matter how benevolent the intentions of Ethos Capital are,
the control of a public commons like .ORG has to be held to the highest
standards.

With the amount of negative PR already generated by the proposed move, it’s
hard to see a way forward for ICANN that is untainted.

It is not at all unlike what is captured by the phrase: _justice has to be
seen to be done_.

------
Svip
Did ICANN ever become a UN agency, or is it still technically under the
jurisdiction of the USA? Or really neither, and nothing will probably happen?

~~~
chx
According to [https://finance.yahoo.com/news/u-government-no-longer-
contro...](https://finance.yahoo.com/news/u-government-no-longer-
controls-160017929.html) from October 2, 2016

> As of Saturday, October 1, the federal National Telecommunications and
> Information Administration no longer exercises control over the Internet
> Corporation for Assigned Names and Numbers (ICANN)

> Instead, as an autonomous not for profit organization, ICANN will now answer
> to international stakeholders across the internet community, including a
> governmental advisory committee, a technical committee, industry committee,
> internet users, and telecommunications experts.

According to
[https://en.m.wikipedia.org/wiki/ICANN](https://en.m.wikipedia.org/wiki/ICANN)

> From its founding to the present, ICANN has been formally organized as a
> nonprofit corporation "for charitable and public purposes" under the
> California Nonprofit Public Benefit Corporation Law. It is managed by a
> 16-member board of directors composed of eight members selected by a
> nominating committee on which all the constituencies of ICANN are
> represented; six representatives of its Supporting Organizations, sub-groups
> that deal with specific sections of the policies under ICANN's purview; an
> at-large seat filled by an at-large organization; and the President / CEO,
> appointed by the board

> There are currently three supporting organizations: the Generic Names
> Supporting Organization (GNSO) deals with policy making on generic top-level
> domains (gTLDs); the Country Code Names Supporting Organization (ccNSO)
> deals with policy making on country-code top-level domains (ccTLDs); the
> Address Supporting Organization (ASO) deals with policy making on IP
> addresses.

So yes, the State Of California has jurisdiction but no control. AFAIK
California has no power to intervene in the internal affairs of any
corporation if they keep the law and while this whole thing stinks, I doubt it
broke any laws.

~~~
syshum
There are several indications that there could have been laws broken. There is
certainly enough for several agencies to start investigations over and at
least block the sale until the investigations are completed

~~~
chx
> There are several indications that there could have been laws broken

which ones you think of

------
rch
It seems like this presents an opportunity to establish a decentralized
alternative registry, initially populated with _.org_ domains acquired prior
to some reasonable point in the past.

------
feistypharit
I can just see the ethos capital whiteboard:

1\. Dot org 2\. Dot net 3\. Dot com 4\. The world!

Dot org will only be the testing ground and only the beginning if they pull it
off.

~~~
SXX
Dot com and net will be operated by Verisign at least until 2024 so it's
unlikely to happen.

~~~
jsjohnst
> at least until 2024

That’s barely over 4 years away.

~~~
SXX
I guess after .org scandal it's will be much harder for ICANN to take control
away from Verisign under guise of some anti-monopolistic practices. On other
hand they already make tons of money from control of their domain zones and
since they are public company they'll less likely try to pull of something
ugly.

~~~
ohashi
VeriSign wants price caps removed like .ORG managed. They are salivating.
Their fingerprints were all over removing price caps for .ORG. Those same
lobbyists are still involved now at ICANN in the groups, subverting the public
interest. I wrote about it originally here when I made a case for ICANN being
captured: [https://reviewsignal.com/blog/2019/06/24/the-case-for-
regula...](https://reviewsignal.com/blog/2019/06/24/the-case-for-regulatory-
capture-at-icann/)

------
pojntfx
Seize the means of registration. Seriously, why on earth are the domain
registries of the world not in the hands of the people? This stuff is far to
important to be under the control of cooperations.

~~~
pjc50
Which people? There's no "world government" representing us, and having it
annexed by the US isn't a great substitute.

~~~
Synaesthesia
You could have a council which is voted for and whose positions are
immediately revocable by popular demand.

~~~
peterwwillis
This doesn't really work. There are other stakeholders than just "the public",
so need to add more to it, and because of this inherent complexity it ends up
sucking. (see Athenian Democracy)

------
ajani
I don’t understand. Does this mean that my existing .org registration will
likely become more expensive at any arbitrary rate, and I have to pay the high
fees or lose it? How do I stop this from occurring?

~~~
jobigoud
You can start here [https://savedotorg.org/](https://savedotorg.org/)

------
jrochkind1
When you pay $1 billion to buy a 501-c-3... where does the money go? A non-
profit has no owners/shareholders.

~~~
bitcurious
Typically endowment, programmatic expenses, and operational overhead are the
big three. You might also see a reserve (emergency) fund or a capital
campaign.

If you a interested, in the details of any given 501c3 look for the tax form
“990”. It’s where the 501c3 report income, governance, and expenditure out to
the IRS. Any nonprofit worth their salt will have a copy published on their
website. They typically run 2, 3 years behind the calendar year, so right now
expect 2017.

Example 990: [https://www.icann.org/en/system/files/files/icann-
fy-2017-fo...](https://www.icann.org/en/system/files/files/icann-
fy-2017-form-990-15may18-en.pdf)

~~~
jrochkind1
It's described in that article as "a deal to acquire the 501c3 non-profit" \--
won't the 501c3 no longer exist independently after being acquired by a for-
profit? So it won't have any endowments or capital campaigns, and won't file
any 990s anymore.

Googling in general, it seems that when 501-c-3's cease to exist, any assets
they had end up being donated to some other existing 501c3, as decided by the
501c3 board. (I am sure some amount of bonuses to salaried staff can also
happen, but probably not a significant proportion of a $1 billion acquisition
price, without seeming illegal).

$1 billion is a pretty big number. Still curious where $1 billion paid to
acquire PIR will end up going. Obviously existing 990s for past fiscal years
from PIR won't tell us that (even less so existing 990s from ICANN, which I
don't think is involved in ownership of PIR or a party to the transaction at
all?).

~~~
neurostimulant
Wikipedia has an interesting tidbit:

> In November 2019, the Public Interest Registry (PIR) was sold by its initial
> owner, the Internet Society, to investment firm Ethos Capital for an
> undisclosed amount. The PIR also announced it would abandon its non-profit
> status to become a B Corporation.

So, it seem like they plan to forgo their nonprofit status to became a for-
profit company?

[https://en.wikipedia.org/wiki/.org](https://en.wikipedia.org/wiki/.org)

~~~
jrochkind1
Oh my. So maybe someone's gonna get really rich from that $1 billion? Honestly
it just sounds sketchier and sketchier.

------
metasj
Nice to see this much interest; sadly it's not clear what to do. Thanks
bhickey for the pointers below to the VA AG and IRS.

I'll try to keep that blog post up to date. Today: PIR posted an official
response -- low on content, no additional redeeming tidbits.
[https://www.keypointsabout.org/](https://www.keypointsabout.org/)

Tellingly, they do not once mention the word "endowment" or derisking [for
ISOC]... which seemed like the one plausible argument in favor of this move:
ISOC sacrificing the public registry for the rest of its mission.

------
GrumpyNl
What can we do to stop this?

~~~
tszyn
Sign a letter to Internet Society here:
[https://savedotorg.org/](https://savedotorg.org/)

Write to news outlets. If this blows up in the mainstream media, public
pressure may be too high for them to go ahead with this deal.

~~~
blackearl
This comes across as alien language to the average person, I doubt the media
finds it a juicy enough story to report on.

~~~
rocqua
"Backroom deals at a organisation that used to be governed by the US will
probably be used to extort wikipedia for $100000 to keep the address
wikipedia.org. The same extortion will be aimed at unicef.org, (add list of
common .orgs here)"

That isn't alien language, and whilst not strictly true, it isn't stretching
the truth more than the news already does habitually.

~~~
bitxbitxbitcoin
That isn't alien language and while it isn't strictly true, it captures the
issue more sincerely than your typical clickbait. Nicely written.

------
nikolay
ICANN is the biggest legalized mafia today! The domainers (just like Bitcoin
junkies) are the worst human material. When it comes to domains, imagine
yourself not paying your phone bill on time, and in 30 days it goes on an
auction and your competitors buys it and routes all calls to their sales team
- that's what GoDaddy and most registrars do today employed by the crooks at
ICANN! This has to stop! Don't just stop at .org, wipe out all the assholes at
ICANN!

------
echelon
Can someone put together a competitive bid and turn `.org` itself into a non-
profit corporation? That sounds like the way to go in order to protect `.org`
in the future.

~~~
fanf2
PIR, the owner of .org, is a non-profit corporation.

~~~
jobigoud
I think that by being acquired and now having owners and stakeholders, PIR is
no longer a non-profit corporation. Their own press-release state they will
_consider_ seeking B Corporation certification.

[https://thenew.org/the-internet-society-public-interest-
regi...](https://thenew.org/the-internet-society-public-interest-registry-a-
new-era-of-opportunity/)

------
andrewstuart
It certainly appears .org has been "lifted".

Maybe a broader look at corruption within ICANN is needed.

~~~
ohashi
It's been corrupt for a long time and beholden to registry interests. The fox
is watching the hen house and they don't even hide it.

------
JimWestergren
My proposal: assign the management of the old core generic top-level domains
to the United Nations. Raise the price to maybe $50 per domain. This will make
domain hoarders/squatters unregister millions of domains. Use the money
collected for the benefit of mankind (earmark the money).

~~~
vegardx
Then you've effectively made it impossible for certain people to buy a domain
name. And I wouldn't really trust that UN would be the best beneficiary of
such money, it's bureaucratic hell.

~~~
JimWestergren
People that cannot afford $50/year for a .com/.net/.org domain name can choose
a cheaper tld. For some poor countries owning such a domain for your business
would signal commitment - a good thing.

Yes, UN is a bureaucratic hell but I see no other existing option.

~~~
simias
Domain names are not a scarce resource, there's no need to put the bar so
high. As far as I can tell the current system with the current pricing seems
to work just fine, why not continue that way?

~~~
bitxbitxbitcoin
Because there are structural incentives for people involved to make money from
it nefariously - so they will inevitably.

------
zingola
What questions to ask at the Internet Governance Forum 2019 where the ICANN
board is present?

~~~
metasj
This outcome is worse than any of the 'worst-case' scenarios hypothesized by
the ICA when they filed their open letter of complaint in May when the price
cap was listed. In hindsight, why would ICANN classify .org (with its enormous
base and community) the way it does new TLDs?

Would ICANN have any recourse if, after allowing this sale, the established
registry dramatically raised prices?

------
DoctorOetker
We need a NameCoin rewrite, preferably based on Algorand (for energy
efficiency). And perhaps a rent-oriented namespace instead of a buying
oriented one. If a sybil-free system can be erected, every host would be
renting namespace from the public, as it is a burden for the public to have to
memorize more complicated strings for their actual favourite sites.

~~~
Legogris
What's your opinion on ENS? ([https://ens.domains/](https://ens.domains/))

~~~
DoctorOetker
ethereum is based on Proof of Work, so can not be as efficient as consensus
algorithms designed to not require PoW (like Algorand, which has the clearest
mathematical / algoritmic underpinning / proof under a very strong attack
model, if you know of others, I would certainly be interested)

------
zingola
What questions shall we ask at the IGF?

