Regulators in Texas, Kentucky, New Jersey and Alabama have simultaneously filed cease-and-desist orders against the virtual casino Slotie. State law enforcement officials allege that Slotie’s owners had been soliciting investors online to participate in illegal gambling operations within the ‘metaverse.’
The metaverse is a digital world in which participants can interact with each other virtually, purchase products, gamble and sell NFTs. The four suing states have accused Slotie of defrauding investors in its virtual casino and ordered that the company immediately halt the sale of NFTs on the platform.
Slotie, based in Georgia, began operations in 2021 and focused on the quickly emerging NFT trend, with its website stating: “NFTs are your ticket into the largest and fastest-growing online casino network on the blockchain.”
The company did securitize the NFTs, however, the cease-and-desist order claims that it failed to provide purchasers with essential information, such as the business addresses, telephone numbers and email addresses of companies and their founders.
The order further alleges that the respondent failed to disclose its assets, liabilities, revenue and other financial information. It is obliged to do so if it is operating as a casino.
Texas state securities board director, Joe Rotunda, acknowledged that the metaverse did offer some legitimate business opportunities but emphasized it was ripe for technically-minded fraudsters.
Rotunda commented: “The latest metaverse investment products – NFTs that purport to provide passive income – often bear significant undisclosed risks. These risks are often significant, and investing in virtual realities can leave investors virtually broke.”
As a consequence of the cease-and-desist, Slotie must immediately halt the sale of any digital products to investors until its security is properly registered. If the founders violate this order, they are subject to a fine of up to $10,000. They must also wait 31 days to request a hearing on the issue.
