Slotie, a metaverse casino, is the latest casino accused of selling unregistered securities. According to reports, four US state securities regulators have issued cease and desist orders to the casino.
Four US States Order Slotie To Stop NFT Sales
Four state security agencies in the United States have ordered a metaverse casino to stop selling its NFTs. The regulator tagged the company’s NFTs as unregistered securities.
Meanwhile, Slotie was offering two NFT collections for users to buy. According to the metaverse casino, the tokens offer holders access to the platform, staking rewards, revenue from lotteries and games, and WATT, the platform’s native token.
However, all four regulators were unhappy about how Slotie marketed its NFTs. Moreover, the reported lack of securities registration only worsened matters.
On October 20th, Texas, Alabama, New Jersey, and Kentucky state securities boards ordered Slotie to cease all operations. As previously stated, the report alleged that the company sold unregistered securities as NFTs.
According to the securities board of Texas, Slotie was selling NFTs similar to stocks. The report from the Texas regulator added:
“Slotie have issued over 10,000 Slotie NFTs which are similar to equities and stocks. The Slotie NFTs are supposed to give investors ownership rights in casinos as well as the ability to partake in the casinos’ revenues passively.”
In addition, the enforcement bodies agreed that Slotie was providing misleading information in its promotional posts. The firm was also allegedly hiding major details about its financial dealings.
Further, the New Jersey Bureau of Securities asserts that the metaverse casino sells securities not registered with the agency or exempted from registration.
Additionally, the platform is accused of failing to disclose all of the legal formalities for running a gambling website. Also, Slotie was reportedly giving deceptive information and not registering as a broker-dealer.
US SEC Allegedly Examining If NFTs Fall Under Securities
Specifically, the filing casts doubt on Slotie’s assertions that its first batch of 10,000 NFTs was sold in less than five minutes and that the next batch, which contained 5,000 NFTs, sold out in two minutes. The filing pointed out that there is no proof of such sales on the blockchain.
On October 20th, a CNBC report highlighted a warning from Joe Rotunda, the Board Director of Texas State Securities. Rotunda warned the people about metaverse-linked NFTs, stating that “NFTs which promise to give users passive income often have huge undisclosed risks.
Rotunda added that these risks are frequently severe, and investing in the metaverse can bankrupt users.
Meanwhile, the latest action from US state regulators comes after a similar order against casino projects, Sand Vegas Casino Club and Flamingo Casino Club, in May.
Five US state bodies accused Flamingo Casino Club of engaging in shady practices. The casino club claimed to have bought metaverse lands from Snoop Dogg and faked having a physical location and wrong contact information.
They also accused the casino of having ties with Russian scammers to defraud US citizens. Meanwhile, the US Securities Exchange Commission has been evaluating whether some NFTs fall under securities.
In March, crypto.news reported that the US SEC allegedly investigated NFT marketplaces and creators. According to the report, the regulator wants to ascertain ID certain NFTs are used to raise funds just like traditional securities.