news Epik continues to dig out from financial mess

[NameInbox]

Domain name registrar Epik continues to dig itself out of a financial hole, but new problems continue to pop up.

The registrar offers a type of store credit called Masterbucks along with an in-house escrow service. Epik was using money from both of these to fund its operations rather than keeping the funds in separate bank accounts. The company also didn’t have an escrow license.

It wasn’t apparent that the money was being used to fund operations (or otherwise unavailable) until customers became spooked that they wouldn’t be able to get their money back. That created what amounted to a run on the bank — and Epik didn’t have the funds to pay back all of its customers.
Epik brought in new management in September that is chipping away at these debts, but it doesn’t have the cash on hand to fund operations and make everyone whole today. It’s in triage mode, taking any new profits that come in and paying them out as available.

Recently, the company sent an email to some customers stating:

When new management took over Masterbucks, the balance was approximately 4.5 million dollars. Through our dedicated and expeditious efforts, the new management team has brought that number down to just over $800k and change.

But last week, a representative of domain seller DomainEmpire posted a review on TrustPilot saying it has a balance of $1.5 million in Masterbucks that it has not been able to withdraw. It accrued this money from domain sales, it stated.

According to DomainEmpire, former Epik CEO Rob Monster offered it 6% annual interest if it kept its money in Masterbucks.

I asked new CEO Brian Royce yesterday via email about DomainEmpire’s $1.5 million debt. He said the number was news to him. He also said that the $800k quoted in the email was no longer correct even without the DomainEmpire number, because he just became aware of another debt of over $300,000 that wasn’t in Masterbucks, bringing the total (without DomainEmpire) to $1.1 million.

It seems that there is no clear record-keeping for the new management, which adds to the challenge.

More details about the blowup at Epik this year are starting to trickle out. A former contract EVP of Operations for Epik sued the company this year, saying he has not been paid. The case was settled. In a court filing (pdf), an attorney for Epik wrote:

While working for Epik, the Plaintiff began working with one of Epik’s chief customers–JJE. JJE offered and invested into a plan for ownership in Epik. Within a few months, however, JJE changed its position and asked Epik if JJE could divest from their investment in Epik. As an agreement and negotiations between Epik and JJE progressed, JJE broke off from their original offer to Epik and negotiated for a settlement.

Monster had previously said the company received a $32 million investment. That investment didn’t fully come to fruition.


source: https://domainnamewire.com/2022/12/01/epik-continues-to-dig-out-from-financial-mess/

 

[Kai W.]

Any data privacy-conscious user logging in through EPIK's SSO system will notice that this is an unusual way to use data. Then, when the attentive user withdraws the first funds via MB, he should also notice what kind of payment gateway would allow cross-domain processing of transactions(For me, selling through nameliquidate and withdrawals through MB), which does not meet the criteria for automated transactions. Although the amount was very small, after completing my first withdrawal, I left there.

The root of the problem is not the cost of running EPIK, but how they treat users' assets (domains, sales revenue and personal data). Shouldn't decision makers be limited to corporate revenues when considering how to dispose of profits? (for EPIK, their revenues are limited to domain registrations, renewals, aftermarket commissions and other business revenues). But now, it's tapping into users' funds, which could face very serious charges.

 

[Kai W.]

EPIK's initial success could not have been achieved without you.

 

[b_i_t]

I'm sorry for those that have money stuck there. Glad I've never used Epik's services.

 

[Kai W.]

I'm sorry for those that have money stuck there. Glad I've never used Epik's services.

With the Great Recession market, any registrar could be in a similar situation, no one can be sure. Maybe only Cheap and Daddy can laugh at this time

 

[D Haynes]

With the Great Recession market, any registrar could be in a similar situation, no one can be sure. Maybe only Cheap and Daddy can laugh at this time

Their situation is of their own making, not the making of a recession market.

 

[D Haynes]

There wasn't and this wasn't caused by a "run" on Epik. They just stopped paying out without warning. The situation is entirely of their own making.

 

[bmugford]

With the Great Recession market, any registrar could be in a similar situation, no one can be sure. Maybe only Cheap and Daddy can laugh at this time

No.

This is what happens when you act as a "self-governing" escrow agent and thumb your nose at proper licensing and regulations.

Brian Royce already said that under Rob's leadership these funds were "commingled". That is a massive no-no in business.

People in professional fields like law, finance, real estate, etc. would lose their licenses or face even more serious consequences for these type of actions.

Brad

 

[Kai W.]

With the Great Recession market, any registrar could be in a similar situation, no one can be sure. Maybe only Cheap and Daddy can laugh at this time

Their situation is of their own making, not the making of a recession market.

I'm not putting in a good word for epik, I'm trying to make the point that we should be sensitive to every registrar. You need to be vigilant for your property and not just follow KOI.
It may be epik now, but perhaps someday soon another registrar will be in a similar situation due to the Great Recession environment? We should be so vigilant that once we notice something unusual in the details, we should react to protect our assets.

 

[Kai W.]

With the Great Recession market, any registrar could be in a similar situation, no one can be sure. Maybe only Cheap and Daddy can laugh at this time

I just tried to express it in a shorter description, and I didn't expect it to generate so much disagreement

 

[bmugford]

I'm not putting in a good word for epik, I'm trying to make the point that we should be sensitive to every registrar. You need to be vigilant for your property and not just follow KOI.
It may be epik now, but perhaps someday soon another registrar will be in a similar situation due to the Great Recession environment? We should be so vigilant that once we notice something unusual in the details, we should react to protect our assets.

When you act as an escrow agent, then commingle customer funds with other funds that is the root issue.

These funds were not Epik's slush fund to play with. They were simply stewards of assets owned by third parties.

This can't happen with a company that is property licensed and follows industry standard practices.

Imagine if you were closing on a house, and you show up and the title company just spent your money on something else. Imagine if a lawyer collects a settlement on your behalf, then just spends the money on something else.

It is not possible if you keep customer funds separate from other funds. There is a reason the field is highly regulated, to avoid this type of nonsense.

It is Epik's behavior that lead to this outcome. The economic conditions might have exacerbated the collapse though.

Brad

 

[dirk]

At least 1.8M of debt the CEO wasn't aware of...

Insane figures. What a mess.

 

[Kai W.]

This can't happen with a company that is property licensed and follows industry standard practices.

Imagine if you were closing on a house, and you show up and the title company just spent your money on something else. Imagine if a lawyer collects a settlement on your behalf, then just spends the money on something else.

https://www.namepros.com/threads/epik-continues-to-dig-out-from-financial-mess.1289717/#post-8777310

I certainly understand the problems, as I have described here. But let's imagine now from an objective point of view, if epik had confused users' money and it had not been discovered so far, who would have questioned it publicly as it is now? Okay, let's continue to expand on the derivation, what if other registrars still have such problems? Who will find out? Just by relying on useless privacy clauses? Of course this is just a theoretical discussion to remind people to take their registrars seriously. Okay, I'm getting off topic, but my explanation seems to be more in the direction of "control before the fact" rather than "fix after the fact or solve after the fact" as we all need now.

 

[Kai W.]

But let's imagine now from an objective point of view, if epik had confused users' money and it had not been discovered so far, who would have questioned it publicly as it is now? Okay, let's continue to expand on the derivation, what if other registrars still have such problems? Who will find out? Just by relying on useless privacy clauses?

If you think such a situation does not exist, then you probably do not understand the domain industry at all. 2018 scam from the Chinese platform 1618.com has some of the same reasons as epik to confuse users' funds.

 

[NYJimbo]

Trustpilot:

LOL !

 

[franka46]

Just had a message from Brian . I think we have to give him some time get all the problems sorted out .
He just has to ''remove'' some dead wood,etc .
Also he is definately NOT a Rob Monster clone .

 

[Grilled]

Just had a message from Brian . I think we have to give him some time get all the problems sorted out .
He just has to ''remove'' some dead wood,etc .
Also he is definately NOT a Rob Monster clone .

Can you elaborate?

 

[franka46]

Can you elaborate?

Chris cant say anymore ,he will try to keep Epik alive ,''whatever it takes"

 

[Grilled]

Chris cant say anymore ,he will try to keep Epik alive ,''whatever it takes"

Just curious why the sudden change... Were you finally paid what you were due and that's why the sudden change, or did you learn anything that would suggest Brian is capable of being a competent domain registrar CEO? Not to question your integrity Frank, but without knowing more, it seems like Brian paid you off, and now you're back on team epik. I hope there's more to it than just one selling their soul.

The epik/masterbucks relationship is starting to sound a lot like the ftx/alemeda relationship. The way epiks trustPilot representative has been responding to epik escrow customers due hundreds of thousands of dollars is reprehensible.

The only public facing things Brian has done thus far since joining epik is (1) tweet elon musk (2) issue misleading statement about mastebucks balance (3) did a dnw interview where Brian admitted there was commingling of funds.... I hope Brians next move is something more meaningful, until then, I'm expecting (4) to be Brian tweeting Kanye in hopes of Kanye buying epik.

 

[Recons.Com]

Chris cant say anymore ,he will try to keep Epik alive ,''whatever it takes"

"Whatever it takes" apparently now means soliciting new escrow deals without mentioning to people that their funds then will be transferred to a "standalone" wreck-of-a-company of Masterbucks and won't be paid off until an indefinite date in the future, if ever.

Mr. Royce is playing games with the livelihood of people with the amounts that make difference for many between good life and being broke and he keeps bringing more and more people into this disastrous circle.

If few people come together, get lawyered up well, it is quite possible that people can go after personal assets of Mr. Royce and Mr. Monster, because what they are doing shouldn't and couldn't have normal ring-fenced protection of an LLC.