Problem in the metaverse as a fraudulent casino makes false promises.
- Five US states are simultaneously filing an emergency cease and desist order against the Flamingo Casino Club, a metaverse virtual casino.
- The scam included false promises of NFT giveaways, horse racing and lotteries.
On Wednesday, Texas, Wisconsin, Kentucky, New Jersey and Alabama filed emergency orders against the virtual Flamingo Casino Club. The 22-page order filed a fraud complaint against the site which proclaimed itself to be a leading virtual casino. This order brought to light the fact that the club’s website omitted key information such as its address, location and qualifications.
The Flamingo Casino Club also claimed to be associated with the Flamingo Las Vegas hotel and casino, which turned out to be false. It touted features like poker tournaments, tennis courts, and virtual concerts. Even telling its NFT holders that they would receive passive income of up to 50% of the profits generated by the casino.
Regulators to the rescue
The scam was initially discovered by Joe Rotunda, who sits on the Texas State Securities Board as director of enforcement. While scanning sites in the metaverse, he came across Flamingo Casino Club. As they began to dig deeper, the site was eventually traced back to Russia. During the discovery phase, they realized that the IP addresses could be traced back to Moscow, ultimately exposing the scam to defraud investors.
While we love the decentralized world that is the Metaverse, it brings the need for regulation into play. It was Rotunda and the subsequent team of investors who were able to not only discover the scam, but also begin to take action against it, ordering them to immediately suspend NFT sales.
How to move forward
Flaws and all, the metaverse is becoming more and more relevant in our world. You may be wondering how to avoid scams such as the “Flamingo Casino Club”. One way to do this is to do your due diligence before investing any money. Often scammers will want you to click on a link to receive land or non-fungible tokens, do not blindly follow these prompts. It is important to do research to know that the company is legitimate and backed by credible sources.
Looking to buy NFTs but don’t have a place to store them? Check out our guide to the best NFT wallets to start storing them today!
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