5 state regulators allege organization is tied to Russia, scamming users using metaverse casino

May 11, 2022 Coin Telegraph

Casino

"The same rules that apply to investments in the physical world continue to apply to investments in virtual worlds," said the regulators.

Authorities in the U.S. states of Alabama, Kentucky, New Jersey, Texas and Wisconsin have filed enforcement actions against the Flamingo Casino Club for allegedly perpetrating a scam through nonfungible tokens (NFTs) tied to a metaverse casino.

In a Wednesday announcement, the Alabama Securities Commission, Kentucky Department of Financial Institutions, New Jersey Bureau of Securities, Texas State Securities Board and Wisconsin Department of Financial Institutions alleged the Flamingo Casino Club has been “fraudulently soliciting NFTs” it claims are tied to ownership rights of a casino in the metaverse, thereby giving token holders a share of any profits. The organization has allegedly solicited investors directly through social media, recruiting influencers to promote NFT sales for the casino.

The state authorities also alleged the club began operating in Russia in March 2022 and made a “simply false” claim that it was partnered with the Flamingo Las Vegas, a brick and mortar casino whose namesake dates back to 1946. In addition, the enforcement actions accused the Flamingo Casino Club of “deception and fraud” for claiming partnerships with Yahoo and MarketWatch.

“Not only is it allegedly concealing its connection to Russia, but the Flamingo Casino Club is also allegedly using a phony office address, providing a telephone number that is not in service, concealing its actual physical location and hiding material information about its principals,” said the five state regulators. “Flamingo Casino Club is also accused of concealing other important information, such as its use of funds and material information about its negotiations for the purchase of land — which it claims to be buying from Snoop Dogg.”

BREAKING: Five states order metaverse casino with alleged ties to Russia to halt sale of NFTs. Texas State Securities Board says casino’s pledge to donate portion of NFT profits to victims in Ukraine is false. My latest w/@TortorelliPaige + @scottzamost https://t.co/J4P69xUPaX
— Eamon Javers (@EamonJavers) May 11, 2022

CNBC reported on Wednesday that the “use of funds” included the Flamingo Casino Club donating a portion of the profits from NFT sales to war victims in Ukraine, a claim Texas State Securities Board enforcement director Joe Rotunda said was false. According to a filing from the Texas State Securities Board, the organization allegedly claimed the NFTs would give users “the right to participate in various drawings and lotteries” for prices such as Tesla vehicles, iPhones and cash.

Since we felt like giving you just a wordly apology due to yesterday's issues wasn't enough, we have decided to hold a giveaway that includes everyone who decided to buy one of our NFTs! pic.twitter.com/pIfTNwSJpf
— Flamingo casino (@Flamingocasino3) April 14, 2022

The five authorities added:

"The same rules that apply to investments in the physical world continue to apply to investments in virtual worlds. Screen names are not a substitute for real names. Qualifications and experience matter. There are no virtual risks, just real risks of losing real money in a real scam.”

According to its website, the Flamingo Casino Club began minting NFTs on April 12. At the time of publication, the site displayed artwork showing the Flamingo Las Vegas Hotel and Casino and said the project was in the process of “acquiring land for the Flamingo Club Casino.”

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Virtue Gaming launches play-to-earn crypto model to bring online poker to US players

December 10, 2021 Coin Telegraph

Casino

The platform is backed by World Poker Tour champion and professional poker celebrity Phil Ivey.

On Friday, Virtue Gaming, a decentralized online poker platform built on the Ethereum (ETH) blockchain, launched the first play-to-earn digital poker casino in the United States.

In the U.S., only six states (Nevada, Delaware, New Jersey, Pennsylvania, West Virginia, and Michigan) have legalized and currently regulate online poker. The country has been slow to act on the subject due to concerns that international poker platforms would take revenue away from domestic, land-based gambling venues. Moreover, even in the states listed, poker platforms must obtain licenses from each individual jurisdiction to operate.

As a result, U.S. residents typically cannot access popular online poker platforms, such as PokerStars or 888 Poker, available to players in the rest of the world. To solve this issue, Virtue Gaming proposed a play-to-earn setup where the platform gives users 500 Virtual Player Points, or VPP, worth an approximate $147.37 USD.

Players will receive these for free upon signup. Players who meet the minimum playtime requirements via cash games and tournaments can then cash out their VPP for Tether (USDT). U.S. players would then be able to compete with players for the rest of the world, who transfer VPP, Ether (ETH) or other cryptos into Virtue Gaming's locked sidechain smart contracts to stake in the game. To prevent cheating, the platform implements peer-to-peer encrypted shuffling for all decks.

Virtue Poker Casino UI | Source: Virtue Poker

According to legislation, "points or credits that the sponsor of the game or contest provides to participants free of charge and can be used or redeemed only for participation in games or contests offered by the sponsor" fall outside the scope of the legal definition of a bet or wager and could theoretically give the play-to-earn model some regulatory leeway. At the time of publication, there are currently over 25,000 players from outside the U.S. on the platform.

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SEC chair compares stablecoins to casino poker chips

September 21, 2021 Coin Telegraph

Casino

"We’ve got a lot of casinos here in the Wild West, and the poker chip is these stablecoins at the casino gaming tables," said Gary Gensler.

U.S. Securities and Commission, or SEC, chair Gary Gensler has doubled down on his “Wild West” analogy for cryptocurrencies, calling stablecoins instruments for gambling at old-timey casinos.

Speaking to Washington Post columnist David Ignatius on Tuesday, Gensler said most projects in the crypto space dealt with securities that fall under the regulatory purview of the SEC, while the Commodity Futures Trading Commission, or CFTC, was better suited for enforcement for others. The SEC chair described the authority of both agencies as “robust” but said there were gaps in the coverage, particularly for stablecoins, which “may have attributes of investment contracts.”

“Stablecoins are almost acting like poker chips at the casino right now,” said Gensler. “We’ve got a lot of casinos here in the Wild West, and the poker chip is these stablecoins at the casino gaming tables.”

Gensler hinted that both the SEC and CFTC would benefit from “help from Congress” in regards to regulation and enforcement of stablecoins. However, according to the SEC chair, the laws currently in place are seemingly broad when it comes to handling a modern financial instrument like crypto.

“I do really fear that we’ll keep bringing these enforcement cases, but there’s going to be a problem. There’s going to be a problem on lending platforms, on trading platforms. Frankly, when that happens, I think a lot of people are going to get hurt.”

The SEC chair’s statement comes following major U.S.-based cryptocurrency exchange Coinbase announcing it would abandon its plan for a crypto lending program. The SEC previously threatened legal action against the exchange, saying it deemed the program a security.

Cointelegraph reported in August that Gensler hoped to introduce crypto-related policy changes surrounding token offerings, decentralized finance, stablecoins, custody, exchange-traded funds and lending platforms. He has long urged crypto projects to register with the SEC, specifically saying they should work with regulators to survive over the long term.