Dept. of Financial Institutions: Five states file enforcement actions to stop Russian scammers perpetrating Metaverse investment fraud
May 11, 2022 – Five state securities regulators simultaneously filed enforcement actions against a Russian organization allegedly promoting fraudulent metaverse investments to residents of the United States. The actions accuse Flamingo Casino Club of perpetrating the scam through the offer of nonfungible tokens, commonly referred to as NFTs, purportedly tied to a metaverse casino. The actions were filed by the Alabama Securities Commission, Kentucky Department of Financial Institutions, New Jersey Bureau of Securities, Texas State Securities Board, and Wisconsin Department of Financial Institutions.
The scheme is rooted in the metaverse – a term that generally refers to one or more interconnected virtual worlds that promote interactivity, entertainment and commerce. Recent advances in technology permit users to access these virtual worlds through digital representations of themselves, often referred to as avatars, and socialize, play, shop or even work. Metaverses are becoming increasingly popular as corporations continue to invest in augmented and virtual realities that increasingly intersect with movies, video games and popular culture.
Although metaverses are generating widespread public interest, bad actors are now leveraging the widespread public interest to perpetrate fraudulent investment schemes. Alabama, Kentucky, New Jersey, Wisconsin and Texas filed today’s actions to proactively stop this type of fraud and protect the public from irreparable…