In its justification of the cease and desist orders, the Texas State Securities Board specifically compared Sloties’ NFTs to something that is “similar to stock and other equities,” implying that the two are interchangeable.
A metaverse casino has been sent with simultaneous cease and desist orders from four state enforcement authorities across the United States. These bodies have determined that the company’s nonfungible tokens (NFTs) are unregistered securities and have ordered the casino to stop trading in them.
The tokens are stated to offer access to the metaverse casino, staking awards, revenue share from its games, lotteries, and native token WATT. These benefits are spread out among two different NFT collections that are supplied by the metaverse casino Slotie.
However, it would appear that the authorities are not happy with the manner in which the platform has advertised the NFTs or its alleged lack of registration as a securities exchange.
On October 20, state securities boards in Texas, Kentucky, New Jersey, and Alabama submitted orders requiring Slotie to cease and desist its operations. The orders cited the platform’s lack of state registration and the offering of unregistered securities via NFTs as the reasons for the suspension of operations.
“The actions accuse Slotie of issuing 10,000 Slotie NFTs that are similar to stock and other equities. The Slotie NFTs purportedly provide investors with ownership interests in the casinos and the right to passively share in the profits of the casinos,” an Oct. 20 statement by the Texas State Securities Board reads.
The agencies also charged the company with giving false information for promotional reasons and withholding important financial data, among other issues.
According to the New Jersey Bureau of Securities’ cease and desist order, Slotie is promoting securities that are neither exempt from registration, “federally covered,” or registered with the Bureau.
Additionally, the platform is accused of failing to disclose all of the required disclosures for operating a gambling platform, in addition to giving information that is deceptive and failing to register as a broker-dealer. These allegations are included in the claim.
In particular, the filing casts doubt on Slotie’s assertions that its first batch of 10,000 NFTs sold out in less than five minutes and that its second batch of 5,000 NFTs sold out in less than two minutes. It is pointed out in the filing that there is no “evidence on the blockchain” to support such assertions.
“In connection with the offer, sale, or purchase of securities, Slotie is making materially false and misleading statements and/or omitting to state material facts,” the filing reads.
In an Oct. 20 CNBC report, Texas state securities board head Joe Rotunda cautioned of metaverse-linked NFTs said :NFTs that pretend to deliver passive income — often hold major concealed risks. “These risks are often significant, and investing in virtual realities can leave investors virtually broke.”
Web3 gambling enterprises Flamingo Casino Club and Sand Vegas Casino Club received identical cease and desist orders from U.S. state enforcement earlier this year.
In the month of May, five state agencies in the United States accused the Flamingo Casino Club in particular of being a scam operation run by Russian scammers. According to these allegations, the scammers pretended to have a partnership with a real-world casino and lied about purchasing Metaverse land from the hip-hop artist Snoop Dogg.
The Securities and Exchange Commission (SEC) of the United States has also been investigating whether or not some NFTs have the potential to be classified as securities.
According to anonymous sources who spoke with Bloomberg in March, the SEC was conducting an investigation into NFT producers as well as marketplaces to determine if “certain nonfungible tokens […] are being utilized to raise money like traditional securities.”
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