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First, Contact Yahoo and make sure that the email is legit.
Assuming it is, hire a lawyer. Not to fight it, but to LEGALLY shut the domain down or transfer it to Yahoo, and then DECLARE that you have done so to them, and then request confirmation that it has been done to their liking. You don't want to get sued for doing the right thing but failing to report it properly.
Mishandling C&D's can be expensive.
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