Sex.com auction delayed by court action

Bids for the domain must start at $1m

The auction of Sex.com, the world’s most expensive domain name, has been stalled after legal action.

The auction was due to be held this week and potential buyers would have had to put up at least $1m for the opening bid. However, the auctioneers told V3.co.uk that an involuntary Chapter 11 bankruptcy [PDF] petition has postponed the sale.

“We can confirm that the auction has been temporarily suspended,” auctioneer Richard Maltz told V3.co.uk.

“The suspension is down to a bankruptcy filing but this could all be sorted out in a month or so.”

Sex.com is the most expensive domain on the internet, selling for $14m in 2006. However, the site failed to bring in the expected returns and it is now back on the market.

Almost since it was registered the domain has been a source of trouble, as documented in the book Sex.com by journalist Kieren McCarthy.

The domain was originally registered in 1994 by Garry Kremen, who also snaffled match.com, jobs.com, housing.com and autos.com. However, he didn’t develop the domain and in 1996 convicted fraudster Stephen Cohen forged a letter to Network Solutions that transferred the domain to his control.

According to the subsequent court case, Cohen made millions of dollars in advertising from the site but was forced to hand it back in 2000 and pay damages of $65m. However, he moved his assets overseas and fled to Mexico until he was arrested by local police.

The latest owner of the site, DOM Partners LLC, has now put the site up for sale and the auction is being seen by many as a measure of the health of the domain name market.

“A lot of people are looking at the sale as a benchmark for the value of domain names,” McCarthy told V3.co.uk.

“People selling domain names are trying to professionalise the market but it is still very immature.”

He continued that the site was currently underdeveloped and in a tough economy it could sell for as little as $5m. But with a proper business site on the domain, which he described as "a terrific storefront", an entrepreneur could make serious money from the site.