Last week, regulators in four different US states simultaneously filed emergency cease-and-desist orders against metaverse casino Slotie. The project said it is working with lawyers and the legal team to address the issue.
The state securities regulators slammed the entity with a cease-and-desist order to shut down its operations. The regulators claimed that the company was offering unregistered securities through non-fungible tokens (NFTs).
State securities boards in Texas, Kentucky, New Jersey, and Alabama accused Slotie of defrauding investors and ordered it to immediately halt the sale of its non-fungible tokens, or NFTs, to retail investors.
Slotie, which is based in the country of Georgia, began operating in October 2021, according to the order. On its website, it said its NFTs “are your ticket into the largest and fastest-growing online casino network on the blockchain.”
The entity runs gambling games in more than 150 casinos. Furthermore, it sold an initial collection of 10,000 NFTs that provided holders ownership interest in the casinos. This way, the investors could earn a passive income from Slotie’s profits.
However, according to the state regulators, these were unregistered securities that violated state laws. As a result, the authorities have filed a cease and desist against Slotie, preventing it from selling the NFTs in the four states.
“The actions accuse Slotie of issuing 10,000 Slotie NFTs that are similar to stock and other equities,” said a statement from the Texas State Securities Board. “The Slotie NFTs purportedly provide investors with ownership interests in the casinos and the right to passively share in the profits of the casinos.”
The order further alleges the respondent failed to disclose its assets, liabilities, revenue, and other financial information related to its operations of the metaverse casinos.
“The latest metaverse investment products — NFTs that purport to provide passive income — often bear significant undisclosed risks,” Joe Rotunda, the Texas state securities board director, said in a statement. “These risks are often significant, and investing in virtual realities can leave investors virtually broke.”
Slotie Says it is Working with Legal Team
In an October 20 announcement on their Discord server, Slotie said it is working with lawyers and the legal team to address the issue.
“As you may have heard, we received an order from four US States about Sloties. We are working with our lawyers and legal team on this immediately and will post a full announcement after exact details are ready,” the project said.
However, the metaverse has not provided further details ever since.
Meanwhile, the move by state regulators comes amid multiple such enforcement actions against other Web3 and NFT projects.
For instance, five US state regulators accused Flamingo Casino Club of being a scam run by Russian fraudsters. Meanwhile, the United States Securities and Exchange Commission (SEC) has been investigating Yuga Labs for possible securities violations.
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