"Icann has been frustrated and distressed by recent management confusion inside RegisterFly," said Icann chief executive Paul Twomey.
Customer service at RegisterFly has nosedived after a management struggle between chief executive John Naruzewicz and his former partner.
Naruzewicz fired the company's chief executive and co-founder Kevin Medina in February, alleging that he stole company resources to support his lavish lifestyle.
The struggle has caused disruptions in RegisterFly's service to customers, prompting Icann to start an inquiry on 21 February that could result in termination of the Registrar Accreditation agreement.
Medina said in a court filing that such a move would be a "devastating (if not death) blow".
At a court hearing on 9 March Medina reclaimed the top management position and was determined to be the sole proprietor of the business.
He also accused his co-founder of destroying the $8m company that claims to be the 15th largest domain registrar in the US.
Court documents read like a television soap opera, with lawyers and former lovers accused of defrauding their opponents out of their legal properties.
Medina portrays Naruzewicz as a person with a "tenth grade education and few technical skills" who has an "inability to deal with customers" and who squandered company funds on $60,000 Moroccan furniture and down payments on a Florida home.
Naruzewicz accuses his former lover of using company funds to pay for a $10,000 Miami penthouse, $6,000 worth of liposuction and $27,000 for a " personal escort".
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