Regulators in four U.S. states issued orders directing Slotie, the operator of a virtual casino, to immediately cease its unlawful activities, according to CNBC.
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Authorities allege that the company’s owners involved investors in illegal metaverse gambling activities.
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The securities regulators in Texas, Kentucky, New Jersey and Alabama accused Slotie of an unlawful securities offering through the sale of 10,000 NFTs.
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The company is based in Georgia and began operating in October 2021. Its site states that NFTs “are your ticket to the largest and fastest-growing blockchain-based online casino network.” The assets also give holders the opportunity to earn rewards, participate in a share of game revenue, and the native token WATT.
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Regulators concluded that, by marketing a securitized product, Slotie failed to provide investors with essential information, including the registered address and founders. The company also did not disclose its assets, liabilities, revenues and other financial information related to its virtual-casino activities.
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Joe Rotonda, director of the Texas Securities Board, said that metaverses offer opportunities for legitimate business. However, this space can also attract scammers.
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“The latest investment products of metaverses — NFTs that aim to provide passive income — often carry significant undisclosed risks, and investments in virtual realities can leave investors virtually ruined,” he said.
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Under the regulators’ order, Slotie must immediately cease NFT sales until it properly registers them as securities. If the order is violated, the company’s founders face a fine of up to $10,000. They also have 31 days to request a hearing on the matter.
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Earlier, over the 12 months from July 2021, criminals stole NFTs worth more than $100 million in frauds, according to Elliptic.
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