Per a report by FOX 47, the Wisconsin Department of Financial Institutions is raising an alarm of an NFT scam involving Flamingo Casino Club, a Russian-based organization.
Flamingo Casino Club plans to profit for the heightened interests in NFT
Flamingo Casino Club, is selling NFT. Which the club claims is tied to a digital casino, and is likely a scam. The DFI and regulators from four other states also claims the Club is withholding some information about its operations.
In a statement on Wednesday, the regulators from five state filed enforcement actions against the club. According to them the enforcement is to “proactively stop this kind of fraud and protect the general public from irreparable harm.” Furthermore, the regulators revealed that the scammers plan to profit from the recent public interest in NFTs.
The DFI said the scam is predicated within the metaverse, a digital space where people can shop, converge and work. In theory, users can buy NFTs to unlock certain experiences and even business opportunities within the metaverse. Purchasing a Flamingo Casino Club NFT purportedly gave investors partial ownership of a metaverse casino. Investors would profit when other users played games at the casino.
Fake Physical Locations and hidden identity
The organization claimed that it was creating the digital casino in collaboration with Flamingo city. Which is an actual brick-and-mortar casino located on the famed urban center Strip. But the DFI claims that this partnership never existed. Flamingo Casino Club allegedly claimed to own partnerships with Yahoo and MarketWatch which also never existed.
Regulators said that in similar scams perpetrators try and hide their true identities so they’ll “go dark” when investors discover their shady actions. The DFI also accuses the Flamingo Casino Club of employing a fake office address and signal, concealing its actual location, and hiding vital information about the use of funds.
Furthermore, the Flamingo Casino Club uses social media platforms like Twitter and Instagram to solicit investors rather than working with legitimate financial professionals. According to regulators this mode of operation is a red flag. The group also uses unlicensed YouTube financial advisors to market their NFT and recruit investors.
“The same rules that apply to investments within the physical world still apply to investments in virtual worlds,” regulators said. “Qualifications and skill matter. There aren’t any virtual risks, just real risks of losing real money in a very real scam.”