Source: Jet Encila
Five US states issued simultaneous cease-and-desist orders against an allegedly Russian-affiliated metaverse casino on Wednesday.
Five state securities regulators issued emergency orders to the Flamingo Casino Club, a virtual casino, to immediately stop selling non-fungible tokens.
The simultaneous filings by agencies in Texas, Wisconsin, Kentucky, Alabama, and New Jersey accuse the Flamingo Casino of launching operations in Russia this March and “fraudulently soliciting” NFTs.
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Metaverse Casino’s Ties With Russia
State law enforcement officials allege that the operators of the online casino failed to reveal their ties to Russia and falsely claimed to be affiliated with respectable businesses.
As incentives for possessing NFTs, the Flamingo Casino provided metaverse concerts, tennis courts, and poker tournaments to NFT holders.
“We give 50 percent of our casino’s profits to our NFT holders,” a website graphic states, allowing NFT holders the opportunity to earn passive income.
The regulators stated in a press release that these NFTs “appear to transfer ownership of a metaverse casino and the right to share in the earnings of the metaverse casino.”
The 22-page order against Flamingo Casino reveals the offering is "essentially a high-tech fraud." (Money Gate)
No Office, No Telephone
The 22-page order reveals “the offering is essentially a high-tech fraud.”
According to regulators, investors make a profit when clients pay to play virtual craps, roulette, blackjack, and other games using avatars.
The regulators further allege that the operators of the online casino hid their ties to Russia by using a fictitious office location and an out-of-service telephone number.
Potential investors were further attracted by false claims of affiliation with the Flamingo Las Vegas Hotel and Casino, a legal casino, which authorities say has “no link” with the Flamingo Casino Club.
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Fertile Ground For Criminals
The civil filing reflects a fresh and concerted action by state authorities to control what is taking shape in the wake of the phenomenal rise of the metaverse, where innovation and speculation have given fertile ground for criminals engaging in fraud and other illegal acts.
Joe Rotunda, chief of enforcement at the Texas State Securities Board, stated, “You’re talking about digital assets and anonymous persons who are masking their whereabouts.”
“Once the funds have been moved, we may not be able to retrieve them, correct? People might lose everything,” said Rotunda.
The operators of Flamingo Casino told investors in April that they were in negotiations with musician Snoop Dogg to acquire a block of property in the Sandbox metaverse, but authorities say there is no proof that these negotiations ever took place.
Featured image from CNBC, chart from TradingView.com