Five US states have taken action against a metaverse casino for allegedly covering its connections to Russia. The casino also deceived users with non-existent partnerships with Yahoo and MarketWatch. The regulators have ordered the casino to immediately suspend the NFT sale and stop all their services to US customers.
No doubt that Metaverse and NFTs have brought some groundbreaking improvements to the iGaming sector. However, recent times have also witnessed a significant increase in criminal activities in their name. Although these are often the result of legal miscommunication, the regulators seem to get serious about this issue, given the recent events.
A metaverse casino named Flamingo Casino Club is booked under several sections after a combined investigation conducted by state security boards in Texas, Wisconsin, Kentucky, New Jersey, and Alabama. The 22-page report called the casino a “high-tech scam” for the lack of transparency and misinformation.
The investigation has been underway since the casino was opened for users in March. After months of work, the regulators can finally trace it back to Moscow, the capital city of Russia. The casino is suspected to be a part of the plan to defraud investors from Russia.
The casino promoted itself with the popular Flamingo Las Vegas Casino and Hotel to get investor trust. However, the Las Vegas casino denied having any ties with the false Flamingo Casino Club. The misinformation does not stop there, as the casino also advertised affiliations with Yahoo and MarketWatch.
As per the report, this fraudulent casino’s desktop and mobile IP addresses lead back to Moscow. So, the chances of getting the investments back are thinner. Joe Rotunda, Director of Compliance at the Texas State Securities Board, also confirmed that the casino started with Russia’s war with Ukraine and collected money from Ukraine supporters in the name of NFT sales.
There has been no information about the current status of the metaverse casino they are supposed to build in The Sandbox. Not only that, but there is no information on the plans or the projected cost for the casino. The lack of transparency and the liability to the assets invested made the regulators conclude that it could not be trusted. They also advise other states and countries to take similar action against the casino.
There is also evidence that the casino sold securitized NFTs to users. The casino offered 50% of its profit as passive income for the NFT buyers. In this sense, NFTs essentially represent partial ownership of the casino. However, there are no details regarding the leadership of the casino for the regulators to move legally.
A metaverse casino, known as the Sand Vegas Casino Club, received similar treatment from the state regulators for selling securitized NFTs in the US just a few weeks ago.