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When they identify a valuable domain, they make money off it by giving it the 'Premium' tag, and collecting a substantial one time fee up front.

If this 'practice' of stealing domains were real, wouldn't it be somewhat easy to prove by tracing the puclic DNS records? Also, I have to imagine it is probably illegal from the position of the registrar. I wonder if anyone has ever tried to take this to court?

Yes there are lots of anecdotes about this going back a long time. I just don't buy them. I think in these cases folks forget to apply critical thinking, and succumb to logical fallacies or pure paranoia.