Company that bought a stolen domain name sues Dan.com and John Doe thief.
A publisher is suing Dan.com after it paid $180,000 for a stolen domain name using Dan.com.
Stands4 paid $180,000 last year to acquire Calculator.com. It then spent $50,000 developing it, adding to its portfolio of sites including Grammar.com, Lyrics.com, and Scripts.com. (The current version of the site is pictured above.)
Shortly after publishing a new site on the domain name, Stands4 was sued in Florida court by Chloe Alston, who said she was the rightful owner and had not sold the domain. After looking at the evidence, Stands4 decided not to contest that she was the domain owner and that the person who sold the domain as Chloe was not actually Chloe.
This was the second time a thief tried to sell the domain. A previous attempt on Sedo was scuttled after the buyer questioned who was selling the domain. Surprisingly, after the first time, the domain was not fully locked down and apparently, the thief still had control.
Now, Stands4 is suing (pdf) DAN.com and the John Doe domain thief.
According to the lawsuit, Dan.com has a policy of not listing domains for sale that have active websites. It alleges that the company made an exception after the seller provided a screenshot of the domain in their Network Solutions account.
In its suit, Stands4 points to several representations on Dan.com’s website about its services, as well as emails from Dan.com employees during the transaction.
Stands4 also alleges that Dan.com paid the thief in bitcoin, making it impossible to recover the funds and difficult to identify the thief.
Stands4 is suing Dan.com for fraudulent misrepresentation, negligence, and unjust enrichment. It is asking for not only its original $180,000 back, but treble damages in an additional amount of $360,000, attorneys fees, and punitive damages.
Dan.com provided this statement in response to the lawsuit:
On February 24, 2021, we received a draft complaint from Stands4 LTD which contained a threat that they’d file this frivolous case if we didn’t settle with them. This lawsuit has simply one purpose only and that’s to attempt to shine a negative light on our company. They know that the case will be dismissed by the chosen US court because the company that instructed us (and paid for the domain) is based in Israel and our TOS dictates that in this case, this dispute should be settled in a Dutch courthouse.
On May 27th, 2020, Stands4 LTD in their own complaint indicates to have contacted the domain seller themselves via WHOIS, negotiated a sale price, and then they instructed our company to handle the domain ownership transfer between the two parties. Our team, spent a couple of days researching the domain and requested additional proof of ownership and representation (KYC) before we proceeded with the transaction. Seven days after the initial offer of the buyer; On June 17, 2020, 09:23 we received the payment for the domain and on the same day June 17, 2020, 17:59 we delivered the domain to the buyer. Weeks later, issues started to appear when the domain was locked by Godaddy. Our first reaction was to provide Stands4 LTD with everything we had on file and Godaddy then unlocked the domain for Stands4 LTD after reviewing the transaction documents. The painful irony, in this case, is that all “evidence” that they use in their lawsuit against us, they actually received from us when we were trying to assist them with literally everything we had. This has been the primary reason why we refused to engage in any settlement discussions with them.
Our domain ownership transfer process has proven its mark in the past 8 years. It has helped us handle close to 80,000 successful domain ownership transfers. However, this is an extremely unfortunate edge case.
We’re already working on an industry-wide solution to prevent stolen domains to be traded on marketplaces or distribution networks. It’s an API approach where we maintain a shared database of stolen domains and automatically prevent transactions before they can occur. However, even, when that system is in place, this transaction wouldn’t have been prevented because the “hacker” in question has had access to the domain via a prior hack for months and the domain was never reported as stolen before the lawsuit.
In conclusion: It’s unfortunate that Stands4 LTD makes numerous false and misleading allegations against us. We dispute each and every claim that Stands4 LTD makes, and specifically deny all allegations in the complaint. We’re confident that the facts, in this case, are on our side. And that’s all that counts in the end.
The stolen domain database sounds like a great idea. In this case, I’m not sure that anything was public about prior thwarted attempts to sell Calculator.com. It would be helpful to all marketplaces to share this data.
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Author: Andrew Allemann