I don't know how you can conclude that. To stop it they would need to challenge it in court and they're up against a potential profit here that can afford any number of big-gun law firms. I don't know the law here, but that's what will determine if this scheme succeeds, and hard proof that this sale violates such applicable laws.

Source?

All that has happened right now is some Bad PR and some suspect dealing that may or may not be grey area legal...

with Billions and Billions of dollars on the table I dont think some Bad PR is going to stop this deal.

Unless there is an actual court order or a official ICANN document blocking the sale it is still moving forward

35 isn't a request, but a message from a powerful politician to the people behind the sale. It's hard to guess the exact meaning without full context, but I think it's "I know enough. If you want to proceed with the sale, you have to give me the names and I'll send some of them to prison." They may try to call his bluff, but they'll be sorry if he indeed knows something.

Conflict of interest may not generally be illegal, but it can be illegal under specific circumstances, especially if undisclosed. Especially things that get filed with the SEC. I would assume a lot of decisions made at the board and C-suite level have stricter requirements for this.

I believe a 501c3 is bound by their charter which would presumably include this conflict of interest policy. Not doing so could cause loss of non-profit status and probably other fines and penalties.