They had previously refused to pay him wages that they had agreed to pay.
It is common in parts of the programming world — especially when dealing with untrustworthy clients — to keep a way to take their IP/disable their website/turn off their domain/etc unless they pay you on time.
No it's not. Illegally holding on to property that's not yours isn't leverage - its theft and leaves you open to prosecution. If you have a contract with someone and they're in breach then the courts provide you an avenue for relief - not blackmail.
If this was his intention this is a really dumb strategy. He went from having a valid lawsuit for his bonus to loosing his company and being at the loosing end of a lawsuit. I don't buy him being that dumb. He just didn't think he was going to get caught.
i have never seen this behavior, so it isn't that common, and even if it were it would still be illegal unless it is something that has been agreed to contractually.
It is common in parts of the programming world — especially when dealing with untrustworthy clients — to keep a way to take their IP/disable their website/turn off their domain/etc unless they pay you on time.