It was so obviously shady that I just backed away and have been waiting ever since for some other naming system to become viable.
Meanwhile, this announcement is a ray of sunshine from behind the Cloudflare. (Sorry for the pun! I coudn't resist.)
I don't really believe when people claim the registrars registered the domains themselves when they typed it in a search box. For example, it costs the registrars around $8 to register a .com, even for themselves. They make $1-2 profit from a purchase, and I would say spending $8 hoping the same user who searched it will be locked in is a risky gamble.
Sure, one can out a real human to assess the domain searches and try to lock users in, but it's still a gamble.
I'm sorry I can't give better details, but I remember clearly the sense of "Now that's pretty fishy..."