Four U.S. state governments have taken legal action against Slotie, a virtual casino that they say lured investors into an illegal gambling operation built in the metaverse.
Authorities in Texas, Kentucky, Alabama, and New Jersey say that Slotie sold more than 10,000 NFTs to investors in the U.S. and other places. It said that these NFTs would give investors a share of the company’s profits, which would be the same as giving them shares in the company.
Even though the company sold securities, it didn’t tell the U.S. Securities and Exchange Commission about them. It also didn’t give the investors the information they needed, like the addresses of the company or its founders, its assets, liabilities, and income.
The Texas State Securities Board says that Slotie is based in Georgia and that it opened for business in October 2021. It still says that its NFTs are investors’ “ticket into the largest and fastest-growing online casino network on the blockchain.”
The four watchdogs want Slotie to stop selling the securitized NFTs right away and not do it again until it gets regulatory approval from the SEC. In the papers they filed with the court, they gave the company one month to ask for a hearing on the issue. If the founders don’t follow the order, they could be fined up to $10,000.
TSSB’s Joe Rotunda said, in response to the crackdown, that scammers could still use the metaverse to take advantage of investors who don’t know what’s going on.
“The latest metaverse investment products — NFTs that purport to provide passive income — often bear significant undisclosed risks. These risks are often significant, and investing in virtual realities can leave investors virtually broke,” he said in a statement to the media.
Slotie is not the only metaverse casino that U.S. authorities have targeted. Five U.S. state regulators, comprising the TSSB and the Department of Financial Institutions of Wisconsin, filed enforcement actions against Flamingo Casino Club in May of this year. The project, whose name matched that of a legal Las Vegas casino, claimed to be constructing a metaverse casino and offered securitized NFTs to fund its development. In addition to violating securities rules, the business had extensive ties to Russia.
A month before, Texas and Alabama had told Sand Vegas Casino Club to stop selling NFTs. The two state watchdogs said that the company misled investors into thinking that the 11,000+ NFTs it sold were not securities.
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