Regulators in four states banded together to accuse Metaverse Casino of selling NFTs that violated securities laws.
On Thursday, state securities regulators from Texas, New Jersey, Kentucky and Alabama filed emergency cease and desist orders against Slotie NFT, a virtual gambling company based in Tbilisi, Georgia that markets itself as “the largest and fastest growing online casino network on the blockchain.”
Slotie, which operates gambling games in more than 150 virtual casinos, sells NFTs that claim to give owners an ownership stake in those casinos, and the ability to passively participate in Slotie’s gambling winnings. The NFTs – of which Slotie has released 10,000 – are rare; The rarer the Slotie NFT, the higher the share of casino income the owner is claimed to be entitled to. It is one of a large number of NFT projects on the market today that offers similar services and revenue sharing rewards to its owners.
State regulators found NFTs to be unregistered securities issued in violation of state laws. they have I ordered Slotie to stop and desist of selling NFTs immediately in the four states that placed orders.
Slotie has 30 days to comply with orders, otherwise her operators risk 2 to 10 years in prison, plus fines, if they are tried and convicted.
State securities regulators filed enforcement action against Tweet embed! Claiming to be involved in fraud by selling securities # denied. The project could face a prison sentence of two to 10 years and a fine if they do not comply pic.twitter.com/qypcwJeqyA
The action comes at a time when tensions surrounding US regulators’ attitude toward NFTs appear to have reached an all-time high. So far, regulators have been particularly resilient about their interest in regulating NFTs as securities, despite recent developments Indicates that it may change soon.
Jeremy Goldman, an attorney specializing in NFTs, said: Decrypt He thinks it makes perfect sense that an NFT project like Slotie would be one of the first to anger the securities regulator.
“This is a drooping fruit,” Goldman said. “[Slotie NFTs] It is marketed as giving holders passive income in revenue obtained through the efforts of Slotties and its partners, which is the definition of a security.”
Goldman says one of the reasons these countries chose to prosecute Slotty for securities violations is the fact that the case is about gambling, a highly regulated and closely watched sector of government law enforcement.
“I imagine part of the reason it came from the states was that they started to worry about gambling,” Goldman said. “And then, I think, in terms of litigation and enforcement strategy, they thought the securities angle was an easier shot.”
How this nationwide action against an online casino will affect the broader conversations about federal regulation of multi-billion dollar premium NFT groups.
earlier this month, An unknown source saidBloomberg The Securities and Exchange Commission (SEC) is investigating whether Yuga Labs, the $4 billion company behind prominent NFT group Bored Ape Yacht Club, violated securities laws in its promotion and sale of NFTs.
Some experts believe the move could be a play by the SEC to make headlines and avoid other government bodies, including the Commodity Futures Trading Commission (CFTC), from planting flags in the NFT-regulatory space.
Goldman sees the biggest development from this week’s enforcement action against Slotie being to suggest there may be more dogs in that fight than previously expected.
“Federal agencies aren’t the only mayors in town,” Goldman said. “I can only speculate, but I feel there are some maneuvers for power and control. This is an indication that countries still have a role to play when it comes to crypto securities.”
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