U.S. state and federal authorities have issued an emergency order in five states requesting that the sale of non-fungible tokens (NFT) from a metaverse casino with alleged Russian links immediately cease, claiming deception, fraud, and registration breaches.
These are the five states: Alabama, Texas, Kentucky, New Jersey, and Wisconsin.
Charges against Flamingo Casino Club
The Texas State Securities Board, the Alabama Securities Commission, the New Jersey Bureau of Securities, the Kentucky Department of Financial Institutions, and the Wisconsin Department of Financial Institutions announced on Wednesday that the Flamingo Casino Club had been fraudulently soliciting NFTs, which it asserts are linked to rights of ownership of a casino in the metaverse and thus give token holders a share of any profits. The casino has reportedly hired social media influencers to promote the sale of NFTs for the organization.
In addition to making false or misleading assertions about its association with the Flamingo Las Vegas Hotel and Casino, the platform was charged by the regulatory organizations with falsely claiming to have given money to Ukraine’s war effort, both of which it denies. According to the unidentified organization, the casino would be built on Snoop Dogg’s virtual property, and they were in talks to buy a piece of it for the project.
They claimed that Flamingo Casino Club hid its assets, liabilities, income, and other important financial information that was relevant to the functioning of the Metaverse casino, in violation of the court’s order. For the investigators to locate the group in Russia, they had to use IP addresses as a source of information.
As reported by the New York Times, the proprietors of Flamingo Casino Club failed to reveal their Russian ties and falsely claimed to be affiliated with reputable companies. As the metaverse expands, so does the potential for fraud, theft, and deception. This court action shows a new and concentrated effort by state authorities to monitor some of this activity.
New Jersey and Alabama have issued a 22-page, statewide order to Flamingo Casino Club claiming that the company’s non-fungible tokens (NFTs) are being sold fraudulently and that Flamingo must immediately stop selling them.
What was offered to investors in Metaverse?
When investors put their money into the alleged swindle, they were told that a working casino and an entertainment centre would be built within Sandbox metaverse, that has recently attracted interest from institutional clients. Planned facilities include “a virtual stadium for virtual sports and concerts, a virtual hotel… [and] a virtual bowling alley,” according to the directives. A “virtual hockey team” was also mentioned.
Avatars would purportedly be able to play “craps, baccarat, mini-baccarat, blackjack, and roulette” at the metaverse casino to earn money.
It was reported in April by Flamingo Casino Club’s operators that they were in negotiations with rapper Snoop Dogg to buy a block of land in the Sandbox metaverse, but authorities claim there is no evidence of such a transaction ever taking place.
There are claims by authorities that Flamingo Casino Club administrators haven’t ever registered the sale of its securitized NFTs and have refused to answer several queries by the securities regulators of the United States and Canada.
When Flamingo Casino Club was believed to have donated a percentage of its NFT sales proceeds to Ukrainian conflict victims, Texas State Securities Board enforcement director Joe Rotunda denied the assertion on CNBC on Wednesday.
According to their official website, NFTs were first minted by the Flamingo Casino Club on April 12, 2012. As of this writing, a picture of the Flamingo Las Vegas Hotel and Casino appeared on the site, along with a statement stating that “we are acquiring land for the Flamingo Club Casino.”
What are NFTs?
Using blockchain technology, NFTs represent ownership of virtual art, music, or even a metaverse casino. The unique characteristics of each NFT, which cannot be replicated, further demonstrate the authenticity of the product. In the past year NFTs have grown not only in popularity but also price, clearly visible in our The most expensive NFTs study.
Each NFT is fully unique, hence it cannot be swapped like-for-like with a unit of bitcoin. In addition to cash, the file contains other information that takes it into the realm of, well, anything. So, NFTs are now collectible digital assets with a monetary value comparable to that of actual paintings.
In contrast to the psychedelic futuristic motion artworks you may have seen or heard about, NFTs may be created from any type of photography, art, audio, or video source. There are even NFT tweets and memes out there.