Metaverse Casino Based in Russia Charged By Five US States With Fraud

Posted on: May 11, 2022, 01:41h. 

Last updated on: May 11, 2022, 03:48h.

Erik Gibbs Read More

Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

A Metaverse-based online casino will have to stop serving customers in the US. Flamingo Casino Club neglected to inform anyone that it has ties to Russia, and five states have banded together to shut it down.

State law enforcement officials say the operators of the Metaverse Flamingo Casino Club did not disclose its relationship with Russia, according to an exclusive CNBC report.

It also claimed it had partnerships with legitimate businesses that don’t actually exist.

The coordinated effort by the five states shows what is possible when states come together to tackle an issue. The next-generation world of the Metaverse is sometimes fertile territory for criminals, but regulators can work together to shut them down.

State securities boards in Texas, Wisconsin, Kentucky, New Jersey, and Alabama filed a 22-page emergency cease-and-desist order against the casino. It outlines what the boards allege are false claims and requires the platform to immediately suspend the sale of its non-fungible tokens (NFT). The boards assert that the casino is nothing more than a “high-tech scam.”

Russia Up to No Good

In March, just a few months after the casino opened for business, investigators began to examine it. According to them, they were finally able to trace the individuals behind the casino all the way to Moscow. The casino promoted its association with Flamingo Las Vegas Casino and Hotel. This was in an effort to increase investor confidence.

There is apparently nothing else behind the charts, promises of lucrative benefits, and endorsements by high-profile names. According to the order, Russia has a scheme to defraud investors, and Flamingo Casino Club is it.

According to the order, the false associations don’t stop there. Flamingo Casino Club advertises affiliations to MarketWatch and Yahoo!  The order states that there is no evidence supporting any association with these companies.

Flamingo Casino Club revealed plans to create a virtual casino on The Sandbox metaverse platform in a promotional video. But it is not yet built.

The casino “intentionally fails” to disclose the status of negotiations to buy virtual land, according to the order. The platform also conceals the “anticipated or projected cost” of purchasing virtual land. In addition, it claims unsubstantiated connections to rapper Snoop Dogg and The Sandbox.

Back to Red Square

Regulators discovered, through a series of subpoenas, that Flamingo Casino Club’s mobile and desktop IP addresses were traced back to Moscow. This reduces investors’ chances of seeing any return on their investment.

According to the order, Flamingo Casino Club “intentionally doesn’t disclose its assets and liabilities or other financial information related to its operations and development and management of metaverse casino.” It apparently hides behind a shroud of ambiguity and anonymity that no legitimate platform would wear.

No Financial Tokens

The organization’s website lists many benefits, including virtual concerts and poker tournaments. NFT holders were also informed by Flamingo Casino Club that 50% of casino profits would be their passive income.

NFTs are blockchain-based digital assets that designate the ownership of items such as virtual art or music. In this case, the claim was partial ownership of a Metaverse casino.

The casino sold securitized NFTs but did not provide any fundamental information. It does not provide details such as names, addresses, or phone numbers. There is nothing that proves the existence of a legitimate leadership team.

Adding up all of the different components and the lack of transparency, there appears to be only one logical conclusion. Flamingo Casino Club likely can’t be trusted, and other states, as well as countries, are likely to present similar cease-and-desist orders.