Five US States Go After Russia-Based Metaverse Casino Accused of Being A Fraud

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Five US States Go After Russia-Based Metaverse Casino Accused of Being A Fraud

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.

Flamingo Club Casino
Flamingo Club Casino
The virtual mascot of Flamingo Club Casino. The Metaverse-based casino may be nothing more than a Russia-led scam. (Image: Flamingo Club Casino)

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 when it did not.

The civil filing by the five states represents a new and coordinated effort by state regulators to monitor some of what happens amid the explosive growth of the metaverse. The next-generation world is sometimes fertile territory for criminals who enjoy committing fraud, theft and deception.

State securities boards in Texas, Wisconsin, Kentucky, New Jersey and Alabama filed a 22-page emergency cease-and-desist order to Flamingo Casino Club. It outlines what they allege are false claims by the platform, and requires it 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

Investigators began scrutinizing the casino in March, shortly after it began operating. They say they were finally able to trace the people behind it all the way to Moscow. The casino also widely promoted its affiliation with a well-known gambling establishment, the Flamingo Las Vegas Hotel and Casino. This was an effort to secure investor confidence.

Behind the fancy charts, profit promises and endorsement of big names was little else. There is apparently just a plan by Russia to defraud investors that a team of state regulators cracked, the order says.

The alleged association with Flamingo Las Vegas doesn’t exist, said Joe Rotunda, director of compliance for the Texas State Securities Board. The cease-and-desist order says that Flamingo Casino Club’s “representations are false,” and the Las Vegas casino denies any relationship.

But the false associations do not end there, according to the order. Flamingo Casino Club also advertises affiliations with Yahoo and MarketWatch. However, there is no evidence to support any association with these businesses, the order says.

In their promotional video, Flamingo Casino Club announced plans to build the virtual casino on The Sandbox metaverse platform. However, nothing has been built yet.

The casino’s leadership team wrote on Instagram that it delayed the digital land purchase due to ongoing negotiations with Snoop Dogg. The rapper owns parts of the Sandbox property it plans to build on. The states’ order and social media posts from the casino confirm this.

The order says the casino “intentionally fails to disclose the status of negotiations to purchase virtual land from Snoop Dogg.” The platform also hides “the anticipated or projected cost of purchasing the virtual land.”

Back to Red Square

Through a series of subpoenas, regulators discovered that Flamingo Casino Club’s desktop and mobile IP addresses trace back to Moscow. This further reduces the chances of investors making a profit.

“I was absolutely shocked,” said Rotunda. He added that Flamingo Casino Club began mobilizing right around the time Russia invaded Ukraine. It told investors that the platform would donate some profits from the NFT sales to victims of Russia’s illegal invasion of Ukraine.

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

No Financial Tokens

Virtual concerts, poker tournaments, and tennis courts are just a few of the benefits the organization lists on its website. The Flamingo Casino Club website also told NFT holders that they would receive 50% of the profits generated by the casino as passive income.

It further attracted customers by offering the opportunity to win exorbitant prizes in its random lotteries. Among the examples were Teslas and iPhones, according to its website.

NFTs are blockchain-based digital assets that designate the ownership of virtual art or music. In this case, the claim was ownership of a Metaverse casino for those who own the NFTs.

Although the casino sells securitized NFT, it did not provide buyers with fundamental information. It doesn’t provide any details, such as their physical address, names or phone numbers. There is nothing that could prove that a leadership team actually exists.

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

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