The Texas State Securities Board, in particular, compared Sloties' NFTs to something that is "similar to stock and other equities" when explaining the cease and desist orders.
Four state enforcement agencies across the United States have issued simultaneous cease-and-desist orders to a metaverse casino because they believe the company's nonfungible tokens (NFTs) are unregistered securities.
The tokens are said to provide access to the metaverse casino, staking rewards, revenue split from its games, lotteries, and native token WATT over two NFT collections offered by metaverse casino Slotie.
However, the platform's marketing of NFTs and its alleged lack of securities registration do not appear to have pleased the regulators.
Slotie was ordered to cease and desist its operations by the state securities boards of Texas, Kentucky, New Jersey, and Alabama on October 20, citing the platform's lack of state registration and the offering of unregistered securities via NFTs.
Slotie is accused in the actions of issuing 10,000 NFTs that are comparable to stock and other equities.According to a statement released on Oct. 20, the Texas State Securities Board, "The Slotie NFTs purportedly provide investors with ownership interests in the casinos and the right to passively share in the profits of the casinos."
The agencies also accused the organization, which they believe is based in Georgia, of concealing important financial information and providing misleading promotional information, among other things.
According to the New Jersey Bureau of Securities' cease and desist order, Slotie is selling securities that are neither "federally covered" nor exempt from registration.
In addition, it alleges that the platform failed to register as a broker-dealer, provided misleading information, and provided all of the required disclosures for operating a gambling platform.
Slotie's claims that its first batch of 10,000 NFTs sold out in less than five minutes and its second batch of 5,000 NFTs sold out in less than two minutes are specifically questioned in the filing because there is no "evidence on the blockchain" to support these claims.
According to the filing, "Slotie is making materially false and misleading statements and/or omitting to state material facts" in relation to the offer, sale, or purchase of securities.
"NFTs that purport to provide passive income — often bear significant undisclosed risks," Texas state securities board director Joe Rotunda noted in an Oct. 20 CNBC report, referring to metaverse-linked NFTs.
Similar cease-and-desist orders issued earlier this year against Web3 gambling projects Flamingo Casino Club and the Sand Vegas Casino Club now include the response from U.S. state enforcement agencies.
In particular, five state agencies in the United States made the claim in May that Flamingo Casino Club was a Russian scam operation that lied about buying Metaverse land from hip-hop artist Snoop Dogg and faked a partnership with a real casino.
Additionally, the Securities and Exchange Commission (SEC) of the United States has investigated the possibility of classifying some NFTs as securities.
Bloomberg was told in March by unidentified sources that the SEC was looking into NFT creators and markets to see if "certain nonfungible tokens [...] are being utilized to raise money like traditional securities."