The Texas State Securities Board said that Sloties’ NFTs are “similar to stock and other equities” when explaining the cease and desist orders.
The nonfungible tokens (NFTs) of a metaverse casino have been ruled to be unregistered securities by four state agencies in the U.S., and the casino has been told to stop what it is doing. Over two NFT collections that metaverse casino Slotie offers, the tokens are said to allow access to the metaverse casino, staking rewards, a share of the revenue from its games, lotteries, and native token WATT.
But the regulators don’t seem happy with how the platform has marketed the NFTs and the fact that it isn’t registered as a securities exchange.
On October 20, the state securities boards of Texas, Kentucky, New Jersey, and Alabama told Slotie to stop doing business. They did this because the platform wasn’t registered with the states and it sold unregistered securities through NFTs.
“The actions accuse Slotie of issuing 10,000 Slotie NFTs that are similar to stock and other equities. The Slotie NFTs purportedly provide investors with ownership interests in the casinos and the right to passively share in the profits of the casinos,” an Oct. 20 statement by the Texas State Securities Board reads.
The agencies also said that the group, which they think is based in the country of Georgia, gave misleading marketing information and hid important financial information, among other things. The New Jersey Bureau of Securities’ “cease and desist” order says that Slotie is selling securities that have not been registered with the Bureau, are not “federally covered,” and are not exempt from registration.
It also says that the platform didn’t give all of the necessary information about running a gambling site, gave false information, and didn’t register as a broker-dealer.
In specific, the filing questions Slotie’s claims that its first batch of 10,000 NFTs sold out in less than five minutes and its second batch of 5,000 NFTs sold out in less than two minutes. The filing says that there is no “evidence on the blockchain” to support these claims.
“In connection with the offer, sale, or purchase of securities, Slotie is making materially false and misleading statements and/or omitting to state material facts,” the filing reads.
According to a report on CNBC from October 20, the director of the Texas state securities board, Joe Rotunda, warned about metaverse-linked NFTs. He said that “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.”
Texas State Securities Board, according to a CNBC article from October 20 The opposition from American state enforcement agencies comes in addition to earlier this year’s cease and desist orders against Web3 gambling initiatives Flamingo Casino Club and the Sand Vegas Casino Club.
In May, five U.S. state agencies specifically named Flamingo Casino Club as a Russian scam artist enterprise that had reportedly fabricated a connection with a real casino and lied about purchasing Metaverse land from rapper Snoop Dogg.
The Securities and Exchange Commission (SEC) of the United States has also been examining the possibility of classifying some NFTs as securities.
According to Bloomberg, which cited unnamed sources in March, the SEC was looking into NFT developers and exchanges to determine whether “certain nonfungible tokens […] are being used to raise money like traditional securities.”