Metaverse Casino Filed A Stop And Desist Order To Prevent NFT Sales
Describing the desist and cease orders, the Texas State Securities Board in specific likened Sloties’ NFTs to an asset “similar to stock and other equities.”
Four state enforcement agencies from different states in the US have simultaneously issued stop and desist orders to a metaverse casino after determining that the company’s nonfungible tokens (NFTs) are unregistered securities.
The metaverse casino Slotie is claimed to be offering two NFT collections in exchange for the tokens, which are said to provide access to the casino as well as staking incentives, revenue splits from its games, lotteries, and native token WATT.
Regulators don’t seem to be happy with the platform’s promotion of NFTs or its purported lack of securities registration, however.
State securities authorities from Texas, Kentucky, New Jersey, and Alabama requested that Slotie stop and desist activities on October 20 in response to the platform’s lack of state registration and its use of NFTs to market unregistered securities.
“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 remark by the Texas State Securities Board reads.
In addition to other charges, the authorities said that the group, which they believe to be located in Georgia, gave false information about its products and finances.
According to the New Jersey Bureau of Securities’ stop and desist order, Slotie is promoting securities that are neither exempt from registration, “federally covered,” or registered with the Bureau.
It also charges the platform with supplying false information, running a gambling platform without complying with the necessary disclosures, and failing to register as a broker-dealer.
There is no “proof on the blockchain” to support Slotie’s assertions that its first batch of 10,000 NFTs sold out in under five minutes and its second batch of 5,000 NFTs sold out in under two minutes, according to the filing.
“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.
Texas State Securities Board Director Joe Rotunda cautioned against NFTs related to the metaverse, stating that they “frequently pose considerable concealed risks,” according to the October 20 report.
“These risks are often significant, and investing in virtual realities can leave investors virtually broke.”
Along with earlier this year’s similar stop and desist orders against Web3 gambling initiatives Flamingo Casino Club and the Sand Vegas Casino Club, state enforcement agencies in the United States are now pushing back.
In specifically, Flamingo Casino Club was charged in May by five U.S. state agencies of operating as a Russian fraud organisation, fabricating a relationship with a real casino, and lying about purchasing Metaverse property from hip-hop musician Snoop Dogg.
The Securities and Exchange Commission (SEC) of the United States has also been examining the possibility of classifying certain NFTs as securities.
In March, the SEC was investigating NFT founders and marketplaces regarding whether “certain nonfungible tokens […] are being utilised to raise money like traditional securities.”
