SEX.com Domain for $14M: A Story of Theft and Comeback

Many people wish they could go back to the '90s, register a dozen premium domains, sell them for millions of dollars, and retire. But that opportunity is gone forever, so all we can do is follow the interesting cases that came out of that era.

Today we're telling the story of the SEX.com domain. It was registered in 1994, stolen in 1995, and sold in 2010 for $14,000,000. The case demonstrates that due to the inadequacy of security systems at the time, owners of valuable virtual assets could lose them within days. 

We covered what SEX.com is and how to drive quasi-free traffic from it in a previous article.

The Battle for the Domain

In 1994, American engineer Gary Kremen launched his first major project — the dating service Match.com. That same year, he also registered several other short domains: jobs.com, house.com, computer.com, and others.

Kremen had no immediate plans to build a project on the SEX.com domain, as he was focused on his dating service. He had no idea that within the next five years he would be locked out of SEX.com due to fraud. 

In 1995, Gary noticed that the domain administrator's contact email had changed, and a different phone number was listed as well. He called the unfamiliar number, and the voice on the other end told him the domain now belonged to someone else. It later emerged that the administrator's details had been changed on the domain provider's end. 

The SEX.com domain had been stolen by another American — Stephen M. Cohen. Once the deed was done, Cohen registered a trademark and celebrated his victory. The fraudster sold subscription-based access to adult content on SEX.com and ran advertising on the site. He even sued other Americans who used the word "sex" in their online projects, even tangentially. 

By late 1995, SEX.com was receiving approximately 5 million daily pageviews on type-in traffic alone — users simply typed the address directly into their browser to access the content. Internet researchers called it the most valuable domain of its time. Cohen later managed to grow traffic fivefold, reaching 25 million users per day. 

The new owner of the premium domain was earning an estimated $500,000 per month. According to court documents, Cohen moved approximately $25 million in ad revenue from SEX.com to offshore accounts — and that was only part of the money. The exact total is known only to him, but the figure could easily exceed $100 million. 

Once Gary Kremen accepted that he had lost the domain entirely, he enlisted attorneys to file a lawsuit. But a quick resolution proved impossible — the litigation dragged on for over five years. Cohen also hired lawyers who did everything they could to delay proceedings, and he claimed in court that he had obtained the domain through legitimate means. 

American journalist Kieren McCarthy later wrote a book about the case and described the battle this way:

Cohen had stolen the domain and was making millions from it, so he was going to fight for it to the last drop of blood. Kremen, beyond the financial losses, was consumed by a sense of injustice. Defeating Cohen had become the driving purpose of his life.

In 2000, the court concluded the case and returned the domain to its rightful owner. Cohen was also ordered to pay Gary Kremen $65,000,000 in damages. Cohen filed an appeal, but it was rejected. When he realized the walls were closing in, he moved his assets abroad and fled to Mexico. 

Cohen was only brought back to the United States in 2005 — and only on immigration violations. The fraudster served six months in prison but never paid the court-ordered damages. The only thing Kremen managed to recover was a property the thief had purchased with money from SEX.com advertisers: a luxury mansion in California spanning 826 sq.m, valued at $4,000,000.

How the Fraudster Got the Domain

In October 1995, domain registrar Network Solutions transferred the SEX.com domain to Stephen Cohen. To this day, there is no official account of exactly how it happened. Several versions exist, and each has some credibility.

The first version: Cohen sent a forged fax to the registrar requesting a change to the domain administrator's contact information. SEX.com was registered to a company called Kremen's Online Classifieds, so Cohen invented a fictitious company director, submitted a request to delete the domain, and quickly got what he wanted.

The second theory involves a sexual relationship with a Network Solutions employee. There is a version suggesting that Cohen convinced someone at the company to commit a crime — though it raises the question of why he limited himself to just one domain. 

Remarkably, even today the contact email of a domain's administrative contact effectively determines its fate. If someone gains access to that mailbox, there is a chance to transfer all domain names out of the account without the email owner's knowledge. Two-factor authentication and domain transfer locks are the primary defenses against this. 

Another interesting detail from this case: Gary Kremen originally registered SEX.com for free through the National Science Foundation, which covered the bill from Network Solutions. 

The story has a happy ending — after reclaiming the domain, Gary Kremen was earning approximately $500,000 per month, and in 2006 he sold it for $14,000,000. He continues to run businesses to this day and is doing just fine financially. 

In January 2023, the domain was once again put up for sale. The minimum auction bid was $20 million, though the outcome of the sale remains unknown. The listing claimed the site attracts 1 million unique visitors, with the buyer receiving both the site and its user base. 

The case prompts reflection not only on the security gaps in various internet services, but also on the importance of the financial model. Kremen sold the domain for $14 million, and its subsequent owners were asking just $6 million more 17 years later. The conclusions about the low return on investment are self-evident.