Five U.S. states have announced plans to take immediate action against an allegedly Russian organization allegedly selling fraudulent NFTs to U.S. investors to finance a casino in the meta-universe called Flamingo Casino Club.
Authorities demanded that the organization stop selling digital assets, accusing it of fraud and selling unregistered securities.
Securities regulators in Alabama, Kentucky, New Jersey, Wisconsin and Texas said Flamingo Casino Club had attracted illegal investments since it began operations in March. The project promised investors profits through the sale of NFTs that served as proof of ownership of items and land in the virtual casino.
The Texas Securities Council’s order pointed out that the tokenized NFTs misled investors with so-called virtual casino profit opportunities and lottery entries that drew such valuable prizes as Tesla, iPhones and millions of dollars in cash.
According to a joint regulatory filing, Flamingo Casino Club spread numerous fake fraud claims to buy NFTs. The project team claimed to have an affiliate relationship with Flamingo Las Vegas Casino of Nevada, but it later emerged that this was untrue. It also turned out to be a lack of cooperation with Yahoo and Marketwatch.
The operators of the alleged scam promised investors that their funds would be used to build a functioning casino and entertainment facility at The Sandbox. To attract potential investors, the project tweeted that it was in talks with celebrity rapper Snoop Dogg to buy some of his virtual land, but regulators denied that information.
Reportedly, “using a fake office address, providing a phone number that is not serviced, hiding its actual location and material information about its principals,” the team also disguised its connection to Russia.
Regulators accused the project of “developing high-tech tricks to create a facade of legitimacy and deceive victims.