Securities regulators in the southern American states of Alabama and Texas have reportedly ordered the blockchain-based cryptocurrency project at Sand Vegas Casino Club to cease selling non-fungible tokens.
According to a Wednesday report from the Reuters news service, the authorities issued their decrees amid fears that the cryptocurrency service was illegally offering unregistered securities and defrauding the public under the guise of funding the development of a new online casino.
A filing from the Texas State Securities Board reportedly declared that Cyprus-based Sand Vegas Casino Club under the leadership of co-founders Finn Ruben Warnke and Martin Schwarzberger had made 11,111 non-fungible tokens available in a ‘high-tech fraudulent securities offering.’ The regulator purportedly asserted that the figures had also erroneously claimed that these interests were not securities despite promising buyers that they could each annually pocket up to $81,000 from their stakes in the coming online casino.
Reuters reported that these cease-and-desist orders are though to be a first of their kind from regulators in the United States for a metaverse platform and indicate that authorities are keen to clamp down on the market in non-fungible tokens, which are represented by assets such as pieces of digital art. The source went on to explain that two men were last month arrested and charged by federal law enforcement bodies for allegedly scamming buyers to the tune of approximately $1.1 million courtesy of the ‘Frosties’ project.
OpenSea is one of the world’s largest marketplaces for non-fungible tokens and this platform reportedly told Reuters that it had earlier disabled the buying, selling and transferal of Sand Vegas Casino Club assets due to the fact that these had violated its service terms. The vendor had purportedly earlier divulged that it was hoping to premiere its online casino in both The Sandbox and Decentraland metaverses with the former service to be up and running by the end of October depending on regulatory hurdles.
Joe Rotunda serves as the Enforcement Director for the Texas State Securities Board and he reportedly disclosed that state actions such as these often pique the interest of federal regulators. Although non-fungible tokens have recently seen a surge in investor activity, the United States Securities and Exchange Commission has purportedly yet to offer formal guidance on whether such stakes may be considered securities in certain instances.
Rotunda reportedly told the news service…
“This is a hot area. We are coordinating among states to investigate the offerings and plan enforcement actions if necessary.”