Regulators in five states simultaneously filed emergency orders Wednesday against a virtual casino they say has ties to Russia and that has been operating in the metaverse, a digital world where participants can interact with each other, purchase products and even gamble.
State law enforcement officials say Flamingo Casino Club’s operators failed to disclose its Russian ties and claimed it had partnerships with legitimate businesses when it didn’t. The civil filing represents a new and coordinated effort by state regulators to police some of what is going on amid the explosive growth of the metaverse, where innovation and speculation have also provided fertile territory for criminals engaged in alleged fraud, theft and deception.
State securities boards in Texas, Wisconsin, Kentucky, New Jersey and Alabama filed a 22-page emergency cease-and-desist order outlining what they allege are false claims by Flamingo Casino Club and requiring that it immediately halt the sale of its non-fungible tokens, or NFTs.
“The offering is simply a high-tech scam,” the order said.
NFTs are blockchain-based digital assets that designate ownership of virtual art, music or, in this case, proprietorship of a metaverse casino to whoever holds the NFT. Moreover, every NFT has unique properties that cannot be replicated, proving its authenticity.
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