Five US states announced plans to take immediate action against a Russian organization allegedly involved in fraudulent NFTs sold to US investors to fund a Metaverse casino called Flamingo Casino Club. Authorities asked the company to stop selling such digital assets, accusing it of fraud and selling unregistered securities.
Securities regulators from Alabama, Kentucky, New Jersey, Wisconsin and Texas said Flamingo Casino Club has solicited illegal investments since it began operations from Russia in March. The project promised investors lucrative profits from the sale of the NFTs – which served as proof of ownership of items and lands in the virtual casino.
The Texas State Securities Board’s order indicated that the securitized NFTs misled investors with so-called opportunities to make profits from the virtual casino and entered lotteries that offered lucrative prizes like Teslas, iPhones and millions of dollars offered in cash.
According to the joint statement from regulators, Flamingo Casino Club has promoted numerous fake claims of scams to purchase their NFTs. The project claimed it had a partnership with Nevada-based casino Flamingo Las Vegas, but later proved there was no such affiliation. The lawsuit also found that the club even lied about working with Yahoo and Marketwatch to validate its scheme.
The operators of the alleged scam promised investors that their funds would go towards building a working casino and entertainment facility in The sandbox would be used. To further entice potential investors to jump in, the project tweeted that it had been in talks with famed rapper Snoop Dogg to buy some of his virtual lands, but regulators dismissed such a fraudulent claim.
“The tip of the eisberg”
Many online scammers tend to remain anonymous when their projects are exposed as scams.
The club also chose such a tactic, regulators noted, by “using a false office address, providing a phone number that is not operational, disguising its actual physical location and hiding essential information about its directors.” The team also hid her true identity and connection to Russia.
Regulators accused the project of “developing high-tech tricks to create a facade of legitimacy and deceive victims,” warning that the recent scam only accounted for a tiny fraction of relevant crimes in the Metaverse space:
“We are uncovering an increasing number of suspicious requests for unregistered securities tied to the Metaverse. Today’s action could well be just the tip of the iceberg.”
Source: Crypto News Deutsch