Slotie received a cease-and-desist order for its NFT sales in Texas, New Jersey, Kentucky, and Alabama as regulators worry about financial crimes in the Metaverse.
Although it remains one of the most talked about concepts expected to define the future of business, work, and human interaction, the Metaverse, with all its potential, can also be home to all manners of unethical activities designed to rip unsuspecting people off. In light of the possibility of exploitation, the Director of the Texas State Securities Board, along with his counterparts from Kentucky, Alabama, and New Jersey, issued a cease-and-desist order to Slotie to stop the sale of NFTs immediately.
Slotie is a metaverse-powered virtual casino that leverages the strength of a virtual environment, addictive activity (gambling), and non-fungible tokens to power Web3 gambling. Slotie launched its offerings in October 2021, and experts believe the metaverse casino has already sold over 10,000 NFTs to players. These NFTs are required passes to play games in Slotie’s virtual casino. While gambling is not a criminal activity in most Western countries, it is subject to regulation, which appears to be where Slotie failed to fulfill its obligations.
According to law enforcement agencies, Slotie’s metaverse gambling ecosystem is illegal. The company did not observe due process before launching its product but continues to invite investors and players to participate in non-taxable activities. Also, Slotie failed the identity test, with no form of contact information or identity documents provided by its owners. Users do not have access to a company address, email/phone number, or any information with which to tie the company’s identity.
The virtual casino also defaults in other areas. Although Slotie has been operational for almost a year, the company has not provided regulators with any information regarding its assets, liabilities, generated revenue, taxes, and all financial statements. Despite selling as many as 10,000 NFTs, Slotie’s operations remain shrouded in secrecy while it offers products to the American public.
For these reasons, the Securities Boards of these four states moved the motion to halt Slotie’s activities. The cease-and-desist motion prohibits the company from selling any more NFTs in Alabama, Kentucky, New Jersey, and Texas. However, Slotie will have a window to contest the motion, with 31 days to demand a trial if there is any dissatisfaction with the move.
The Metaverse and NFT markets are worth billions of dollars already, with more growth expected in the future. With such amounts of money in the mix, regulatory compliance is expected, as government agencies must protect investors. With its shady approach towards virtual gambling and its use of the Metaverse to generate hype, Slotie has earned itself a bad reputation. An appeal may not be on the cards, as it would mean the company’s owners may have to reveal their identities.
With more investors entering the Metaverse and NFT markets, regulators are expected to become wary of malicious actors whose intent will border on scams. The Metaverse may be the future of work, entertainment, and business, but only if all parties are willing to remain law-abiding while they build in it.