Five US state regulators have issued a 22-page emergency cease-and-desist order against a fraudulent metaverse casino with connections to Russia. The lawsuit was filed on Wednesday, with the main claim being fraud with non-fungible tokens (NFTs).
Texas State Securities Board, New Jersey Bureau of Securities, Kentucky Department of Financial Institutions, Alabama Security Commission, and Wisconsin Department of Financial Institutions are the five prosecutors.
According to the prosecutors’ press release, the casino claims NFTs are connected to ownership rights since the website offers users to play virtual concerts, blackjack, roulette, poker tournaments, and other conventional casino games using an avatar they design.
Furthermore, the Director of Enforcement for the Texas State Securities Board declared that the casino’s commitment to contribute a part of NFT proceeds to Ukraine war victims is untrue.
The NFT holders were duped into believing they would receive 50% of the casino’s revenues as passive income. It also attracts users by giving them the chance to win extravagant prizes like iPhones and Teslas through randomized lotteries.
The Flamingo Casino Club convinced the sought-after investors using social media by enlisting influencers to promote the casino’s NFT sales. Instead of financial experts, these NFTs were sold to investors through the company’s website and social media profiles.
Prosecutors have also accused the club of making false claims about its affiliation with the Flamingo Las Vegas, a brick-and-mortar casino whose namesake has been operating in Las Vegas since 1946.
Investors began analyzing the casino soon after it opened in March 2022, claiming they could track out the individuals behind it in Moscow, Russia. According to the enforcement actions, the club was also charged with ‘deception and fraud’ for claiming a collaboration with MarketWatch and Yahoo.