Texas Securities Commissioner Files Emergency Action to Stop Russian Scammers Perpetrating Metaverse Investment Fraud

May 11

Securities Commissioner Travis J. Iles filed an Emergency Cease and Desist Order, in concert with other state securities regulators to stop a fraudulent metaverse investment scheme.  The order accuses Flamingo Casino Club of illegally soliciting securitized nonfungible tokens, or NFTs, that purportedly convey ownership of a metaverse casino and the right to share in the profits of the metaverse casino.  

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.

“The metaverse is an exciting concept and many legitimate businesses are now exploring opportunities in the metaverse,” said Enforcement Director Joe Rotunda.  “However, scammers often leverage excitement and interest to peddle worthless products.  State regulators uncovered this scam and we’re already identifying and investigating other suspect metaverse investment schemes.” 

“As things change, things stay the same. We see variable iterations of schemes with technology evolving to suggest that a fraud masquerading as a new financial product is novel and lucrative. We have modern-day boiler rooms no different from the ‘90’s, save the ability of reaching tens of thousands and more with the click of a computer button and an account on a social media platform. The constant – bad actors trying to part retail investors from their hard-earned money,” said Commissioner Iles. 

The states issuing actions today were the Alabama Securities Commission, Kentucky Department of Financial Institutions, New Jersey Bureau of Securities, Texas State Securities Board, and Wisconsin Division of Securities. 

Contacting your state securities regulator is an excellent first-step to avoid being defrauded.