Five US States Order NFT Sales Suspended At Metavers Casino With Alleged Links To Russia

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

State law enforcement officials say the operators of the Flamingo Casino Club have not disclosed their relationship with Russia and claim that it has partnerships with legitimate businesses while it does not. The civil case represents a recent coordinated effort by state regulators to control some of what is happening amid explosive growth in the metaverse, where innovation and speculation also provide fertile ground. for criminals involved in allegations of fraud, theft and deception.

State securities boards in Texas, Wisconsin, Kentucky, New Jersey and Alabama have filed a 22-page emergency cease-and-desist order outlining their alleged false allegations against the Flamingo Casino Club and asking for an immediate cease-fire. sell not it. -fungible tokens or NFT.

Source: Flamingo Casino Club

“The offer is a high-tech scam,” according to the order.

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

Investigators began inspecting the casino in March shortly after it opened and said they were finally able to track down the people behind it as far as Moscow.

In an exclusive interview, the agency’s top official told CNBC that the casino attracts optimistic investors with false promises.

“I was really shocked,” said Joe Rotunda, director of operations at the Texas State Securities Board.

Virtual concerts, poker tournaments and tennis courts are just a few of the benefits listed on the organization’s website. The Flamingo Casino Club website also tells NFT holders that they will receive 50% of the revenue earned by the casino as passive income. It even attracts customers by offering a chance to win multiple prizes like Teslas and iPhones in its random lotteries, according to its website.

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

Source: Flamingo Casino Club

The casino also sold its partnership with a well -known gambling establishment, the Flamingo Las Vegas Hotel and Casino, to ensure investor confidence.

But behind beautiful graphics, profit promises and big-name endorsements, there is a Russian plot to defraud investors that was foiled by a group of state regulators, the order says.

Flamingo Casino Club “intentionally failed to disclose its assets, debts, income and other financial information relevant to its operations and to the development and management of Metaverse Casino,” according to the order.

The order states that even if the casino sells securitized NFTs, it does not provide buyers with basic information such as physical address, telephone number or any evidence proving that members of its management team really exists.

Screenshot taken from the Flamingo Casino Club website showing its management team. According to the order, the casino “did not provide sufficient information to allow investors to independently verify that David Aaronson, Waldo Lorenzo, Julia Munn and Sebastian Ruspoli actually existed.”

Source: Flamingo Casino Club

“You’re talking about digital assets and anonymous individuals hiding their location,” Rotunda said. “So once the money is transferred … we can’t get it back, right? It will enter the black hole through the blockchain, and people may lose everything. ”

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

Source: Flamingo Casino Club

In addition to this murky money trail, the alleged partnership with Flamingo Las Vegas, a well -established casino on the Strip, was also underway, Rotunda said. The cease and desist order states that “Flamingo Casino Club’s representations are untrue,” and the Las Vegas casino denies any relationship.

But the false partnership didn’t stop there, according to the order. Flamingo Casino Club claims ties to Yahoo and MarketWatch, but there is no evidence to support a relationship with the companies, the order says.

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

In its promotional video, Flamingo Casino Club announced plans to build a virtual casino on The Sandbox metaverse platform, but it has not yet been built.

The casino management team wrote on Instagram that they were delayed in buying the digital land due to ongoing negotiations with Snoop Dogg, who owns parts of the Sandbox property he plans to build, according to the order and on his own. casino publication on social networks.

The order states that the casino “intentionally failed to disclose the status of negotiations for the purchase of virtual land from Snoop Dogg” as well as “the expected or planned cost of purchasing the virtual land.”

Through a series of subpoenas, regulators discovered that the desktop and mobile device IP addresses of Flamingo Casino Club were registered in Moscow, further reducing the chances of investors seeing returns.

“Investors have to look for these ghosts to try to recover. And they can’t recover if the money goes to Moscow,” Rotunda said.

In addition, Rotunda said the casino operators started operating the Flamingo Casino Club like Russia’s invasion of Ukraine and then informed investors that some proceeds from their sale of NFT would be donated to victims in Ukraine. . .

“And they didn’t just talk about how they donated one or two people to Ukrainian civilians, they proclaimed it publicly,” Rotunda said. “I don’t see any money that benefits Ukrainians.”

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