Monday, December 11, 2023

Five US states order to cease NFTs of metaverse casino with alleged ties to Russia that claims affiliation with Flamingo | Yogonet International

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U.S. state regulators of Texas, Wisconsin, Kentucky, New Jersey and Alabama simultaneously filed emergency orders Wednesday against a virtual casino they claim has ties to Russia and that has been operating in the metaverse, Flamingo Casino Club, which markets an alleged affiliation with Caesars’ Flamingo Las Vegas Hotel & Casino. This follows a similar case last month in which Alabama and Texas halted NFTs sales of Cyprus-based Sand Vegas Casino Club.

Following a civil filing, state law enforcement officials say Flamingo Casino Club’s operators failed to disclose its Russian ties and claimed it had partnerships with legitimate businesses when it didn’t, CNBC reports. 

State securities boards in the cited five states filed a 22-page emergency cease-and-desist order outlining what they allege are false claims by Flamingo Casino Club and requiring that it immediately halt the sale of its non-fungible tokens, or NFTs. “The offering is simply a high-tech scam,” the order said.

NFTs are blockchain-based digital assets that designate ownership of virtual art, music or, in this case, proprietorship of a metaverse casino to whoever holds the NFT. Moreover, every NFT has unique properties that cannot be replicated, proving its authenticity.

Investigators began scrutinizing the casino in March not long after it began operating and say they were ultimately able to trace the people behind it to Moscow.

Joe Rotunda, director of enforcement at the Texas State Securities Board, the lead agency’s top official, told CNBC the casino lured in hopeful investors with false promises.

Virtual concerts, poker tournaments and tennis courts are just a few of the perks listed on the organization’s website. Flamingo Casino Club’s website also told NFT holders they would receive 50% of the profits generated from the casino as passive income. It further enticed patrons by offering a chance to win exorbitant prizes such as Teslas and iPhones in its randomized lotteries, according to its website. The casino also widely marketed its affiliation with a well-known gambling establishment, the Flamingo Las Vegas Hotel and Casino, to secure investors’ trustBut the promises of profits and the big-name backings were a scheme out of Russia to defraud investors that a team of state regulators unraveled, the order says.

Flamingo Casino Club is “intentionally failing to disclose its assets, liabilities, revenue and other financial information germane to its operations and the development and management of the metaverse casino,” according to the order. 

The order says that although the casino sells securitized NFTs, it failed to provide purchasers with fundamental information such as its physical address, phone number, or any evidence proving the people on its leadership team actually existed.

Last month, state securities regulators for Alabama and Texas halted the sale of metaverse casino non-fungible tokens (NFTs) associated with a fraudulent investment scheme accused of violating state securities regulations. The firm was found to be illegally offering unregistered securities and defrauding the public.

The Texas State Securities Board entered an Emergency Cease and Desist order naming Cyprus-based Sand Vegas Casino Club and its founders Martin Schwazberger and Finn Ruben Warnke. The parties are accused of illegally offering NFTs to fund the development of virtual casinos in metaverses.

Following the cease and desist order to Sand Vegas Casino Cub, the TSSB reached out to popular NFTs marketplace OpenSea to notify it that it has been listing securities as per the state regulations without obtaining the necessary license. OpenSea has now suspended the trading of these non-fungible tokens.


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