Five US states order a halt to NFT sales of the Metaverse Casino, which has alleged ties to Russia – Reuters

Source: Flamingo Casino Club

Regulators in five states simultaneously filed emergency orders Wednesday against a virtual casino they say has links to Russia and operates in a digital world where participants can interact with each other, buy products and even play.

State law enforcement officials say the Flamingo Casino Club operators have not disclosed their ties to Russia and have claimed it has partnerships with legitimate companies when it has not. The civil case represents a new coordinated effort by government regulators to control some of what is happening amid the explosive growth of the metaverse, where innovation and speculation have also provided fertile ground for criminals involved in allegations of fraud, theft and deception.

The stock boards of Texas, Wisconsin, Kentucky, New Jersey and Alabama have filed a 22-page emergency cease and desist order outlining what they claim are false allegations about the Flamingo Casino Club and requiring it to stop selling it immediately. – Fungiformable tokens or NFTs.

“The offer is just a high-tech scam,” the request said.

NFTs are blockchain-based digital assets that refer to the ownership of virtual art, music, or in this case metaverse casino ownership of whoever owns the NFT. In addition, each NFT has unique properties that cannot be replicated, thus proving its validity.

Investigators began examining the casino in March, shortly after it opened, and said they had finally been able to track down the people behind it in Moscow.

In an exclusive interview, a senior agency official told CNBC that the casino lured optimistic investors with false promises.

“I was absolutely shocked,” said Joe Rotunda, executive director of the Texas State Securities Board.

Virtual concerts, poker tournaments and tennis courts are just some of the perks listed on the organization’s website. The Flamingo Casino Club website also told NFT holders that they will receive 50% of the profits generated by the casino as passive income. It has also attracted customers by offering a chance to win exorbitant prizes like Teslas and iPhone in random lotteries, according to its website.

Screenshot from the Flamingo Casino Club website indicating that NFT holders are eligible for prizes, such as Teslas and iPhone.

Source: Flamingo Casino Club

The casino has also marketed its association with a famous gaming establishment, the Flamingo Las Vegas Hotel and Casino, to ensure investor confidence.

But behind the fancy graphics, promises of profits and big-name endorsements, there was a scheme by Russia to defraud investors that was exposed by a team of government regulators, the order said.

According to the order.

The order states that although the casino sells insured NFTs, it has not provided buyers with basic information such as a physical address, phone number, or any evidence that members of its management team actually exist.

Screenshot taken from the Flamingo Casino Club website showing the management team. According to the order, “the casino does not provide sufficient information to allow investors to independently verify the existence of David Aronson, Waldo Lorenzo, Julia Munn and Sebastian Ruspoli.”

Source: Flamingo Casino Club

“You are talking about digital assets and anonymous individuals who are hiding their locations,” Rotunda said. “So once the money is transferred… we may not be able to get it back, right? It goes into a black hole through the blockchain, and people can lose everything.”

Screenshot taken from the Flamingo Casino Club website describing the financial benefits for retail investors.

Source: Flamingo Casino Club

In addition to this murky financial track, the alleged partnership with Flamingo Las Vegas, a well-established casino in the sector, was also fabricated, Rotunda said. The cease and desist order states that “the representations of the Flamingo Casino Club are incorrect”, and the Las Vegas Casino denies any relationship.

But according to the order, the spurious partnerships don’t stop there. Flamingo Casino Club claims affiliation with Yahoo and MarketWatch, but there is no evidence to support a relationship with these two companies, the order states.

The request states that “Flamingo Casino Club does not provide buyers with any information that reflects any kind of relationship with Yahoo or MarketWatch,” adding that the casino provides hyperlinks to press releases distributed on Yahoo Finance and MarketWatch.

Flamingo Casino Club announced in its promotional video plans to build a virtual casino on the Sandbox metaverse, but nothing has been built yet.

The casino management team wrote on Instagram that they had delayed the purchase of digital land due to ongoing negotiations with Snoop Dogg, who owns parts of the Sandbox property he plans to build on, according to demand and the casino’s own social media posts.

The order states that the casino “deliberately failed to disclose the status of negotiations regarding the purchase of the virtual land from Snoop Dogg” as well as the “expected or anticipated cost of the acquisition of the virtual land.”

Through a series of subpoenas, regulators discovered that the Flamingo Casino Club’s desktop and mobile IP address had been registered in Moscow, reducing investors’ chances of seeing returns.

Investors have to hunt these ghosts to try to recover. “They will not recover if the money goes to Moscow,” Rotunda said.

In addition, Rotunda said casino operators began mobilizing the Flamingo Casino just as Russia invaded Ukraine and then announced to investors that some of the profits from NFT sales will be donated to Ukrainian victims.

“And they didn’t just talk about how to donate one or two people to Ukrainian civilians, they announced it publicly,” Rotunda said. “I haven’t seen any money that benefits the Ukrainians.”

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