State securities regulators order virtual casino firm to stop selling NFTs

FILE PHOTO: A visitor is pictured in front of an immersive art installation titled "Machine Hallucinations — Space: Metaverse" by media artist Refik Anadol, which will be converted into NFT and auctioned online at Sotheby's, at the Digital Art Fair, in Hong Kong, China September 30, 2021. REUTERS/Tyrone Siu/File Photo

WASHINGTON (Reuters) -Securities regulators in the U.S. states of Texas and Alabama on Wednesday ordered an online casino developer to stop selling non-fungible tokens (NFTs), alleging the firm was illegally offering unregistered securities and defrauding the public.

Cyprus-based Sand Vegas Casino Club and co-founders Martin Schwarzberger and Finn Ruben Warnke allegedly offered 11,111 NFTs in a "high-tech fraudulent securities offering" to fundraise to build virtual casinos in the metaverse. They also erroneously told potential buyers the tokens were not securities, the Texas State Securities Board said in a statement.