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Monday, 30 January 2023
Virtual Casino Firm Not Allowed To Sell NFTs: State Securities Regulators Order Company to Stop

Virtual Casino Firm Not Allowed To Sell NFTs: State Securities Regulators Order Company to Stop

2022-10-29

Nevada gaming regulators issued a cease-and-desist order Friday to Endit Group, a leading provider of online and mobile casino software, and its parent company Endit Interactive, LLC, after regulators learned the company was offering non-existent freegame tokens to players as a means to sell NFTs (non-financial transactions). In a statement, regulators said Endit Group and Endit Interactive were not entitled to offer freegame tokens because the company’s software did not meet the definition of a gaming company or offer gaming services within the meaning of the Nevada Gaming Control Law. The statement added that the company was likely operating within the purview of the false-signature law. “The purpose of the cease-and-desist order is to prevent Endit from facilitating the sale of false NFTs and other unlawful activities, which will help protect consumers,” said Jennifer McKeown, an agent with the Division of Gaming Enforcement. “The cease-and-desist order issued today is the first step in pursuing a consistent, nationwide approach to protect consumers from these illegal schemes.” Endit Group’s parent company has already taken steps to comply with regulators: The software firm has ceased all operations, and its parent company has filed for bankruptcy. The company’s CEO and other executives have also announced their resignations.

The company’s executives will be required to undergo a background check, and they

Why was Endit Group Not Allowed to Offer NFTs?

In April 2016, the Division of Gaming Enforcement became aware of concerns regarding the financial viability of some online casinos. The information in these complaints led regulators to perform an audit of Endit’s operations, which revealed that the company was offering false NFTs to players as a means to sell the tokens. As part of the audit, regulators interviewed former players and staff members who had worked at the affected online casinos. The audit also discovered that Endit Group and its parent company, Endit Interactive, were likely operating within the purview of the false-signature law, which allows for the false-signature practice.

What is a False Signing Certificate?

A false signing certificate is a document created by an operator to certify that the gaming activities at a location are in compliance with applicable laws and regulations. The false signing certificate is not issued by the gaming operation itself, but by an authorized third party. The false signing certificate is a legal document that certifies that the gaming operations are in compliance with state law. Individuals who create false signing certificates are called signers. In the gaming industry, individuals who sign false signing certificates are called false signers. A false signing certificate is a signed document, often written in an illegible font, that certifies that an online gaming operation is in compliance with state law. One of the elements needed to create a false signing certificate is a valid, paid-up gaming license from the state in which the location of the gaming operation is located.

 
 

How Does a False Signing Certificate Work?

When a customer requests to play at an online casino that issues fake signing certificates, the casino’s staff issues a buy-in for the amount of the requested amount. If the amount is higher than the amount of the customer’s bank check or other valid form of payment, then the customer is denied access to the gaming establishment. The casino is not required to pay the difference between the amount of the bank check or other valid form of payment and the amount of play.

How to Achieve a False Signing Certificate

Individuals who create false signing certificates typically do so by hiring a third party, such as a law firm, to issue a false signing certificate on their behalf. The hiring party then signs the false signing certificate on behalf of the person who hired it. The false signing certificate is then registered with the gaming regulatory body.The false signing certificate cannot be detected by an audit of the gaming operations because it is not recorded in the books and records of the company. It is often created on a computer that is not connected to the internet.

Conclusion

According to the Nevada Gaming Control Act, a gaming company or facility is subject to regulation if it provides gaming services. If the company does not provide any gaming services, it is not subject to regulation. The filing of a false NFT is a violation of the Nevada gaming laws and could result in the company being shut down or having its gaming license revoked. To guard against the possibility of fraud, the gaming division of each state should require all operators to sign an affidavit confirming that they are in compliance with state law and have paid any applicable fees. Those without a valid gaming license can face harsh governmental consequences.

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