EURid has suspended 74,000 .eu domain names and sued 400 registrars for breach of contract, citing "abusive behavior from a syndicate of registrars who have systematically acquired domain names with the obvious intent of selling them."

“In this case we are convinced that the domain name holders of the 74 000 .eu names (Ovidio Ltd, Fausto Ltd and Gabino Ltd) are acting as a front for a number of registrars," said Herman Sobrie, Legal Manager of EURid. "The domain name holders and the registrars can be regarded as one and the same. Since registrars should only register domain names for existing customers and not 'warehouse' the names in order to resell them at a higher price, this is clearly in breach of the registrar contract."

EurID's action follows widespread concern that the registrars had been able to game the system prior to the launch of the .eu TLD by creating hundreds of business entities to serve as "registrars," allowing them additional opportunities to grab names. Critics of EurID's handling of the launch included Go Daddy CEO Bob Parsons.

"These companies, instead of only registering their real active registrars, created hundreds of new 'phantom' registrars," Parsons wrote in April on his blog. "Two weeks before the landrush period began there were 800 — many real, many not — accredited .EU registrars. Then just before the landrush period began, Voila! Hundreds more registrars appeared. According to the EURid website – at least 300 more registrars appeared. Some legitimate registrars are claiming that the number of bogus registrars could even be much greater than this."

After taking several months to review the process, EurID has come to a similar conclusion. "When the system is abused there is a risk that the perceived value of .eu will decrease, not only for the almost two million legitimate holders of .eu domain names but also for all fair registrars," the registry said in a release. "That is why EURid wants to act firmly against any improper behavior regarding .eu domain names."

The outcome of the suspended domain names now awaits a court decision, after which EURid would make the names available for registration again. EurID said it would continue to review .eu registrations for abuse.