Investors in cryptocurrencies have spent hundreds of millions of dollars purchasing virtual land, and con artists are taking note of this trend. According to Joseph Borg, a financial regulator in Alabama, metaverse real estate con artists present a risk to investors in the state where he was raised.
“There are offers for [metaverse] real estate [scams] where they will tell you, ‘Get in now while it’s hot before the price goes up,’ and everybody buys it, and you’re left out,” said Borg, the longtime director of the Alabama Securities Commission. “Get in now while it’s hot before the price goes up,” “That is right up there with the one that is selling real estate on the moon,” the speaker said.
Indeed, the crypto-verse is filled with a variety of “metaverses,” such as Yuga Labs’ Bored Ape-themed Otherside realm (which has generated over $800 million in lifetime land sales), Decentraland (which has generated $330 million), The Sandbox (which has generated $295 million), and many more. The top 32 virtual worlds are ranked on one of the dashboards on the crypto data website Dune.
This does not imply that the land transactions in question are inherently fraudulent. Putting aside speculators, there are investors who believe there is value in buying a piece of digital real estate and then developing their own virtual worlds on top of that plot of land. The virtual world of Decentraland features a wide variety of surreal buildings and attractions.
But there is evidence that suggests that some of those builders are dishonest. In May, the Borg’s ASC and four other state-level financial regulators issued an order mandating that a metaverse casino with alleged ties to the Russian government stop selling non-fungible tokens (NFTs). The regulators asserted that the casino, which was known as the Flamingo Casino Club, was actually a front for con scammers.
It’s a different story when it comes to actually locking up the alleged con scammers.
According to what Borg told CoinDesk, regulators need to first identify the scammers before they can take order against them. But doing so can be difficult in the metaverse because fraudsters can hide behind the cloak of internet anonymity, which in today’s world means masquerading in sometimes bizarre ways, as Borg explained.
Borg stated that making a statement to the effect that “we are going to issue an order against the guy who looks like a duck with a hat on in the metaverse does not do us any good.” “We’ve got to find a computer, trace it, and figure out where their money is going and how they’re running their business,” the agent said.
As a result of the absence of identifiable persons of interest and the limited legal options available as a consequence of this situation, the ASC has issued an advisory warning people about the risks left with investing financial investments in potential scams involving the metaverse.
However, this does not mean that the commission, which has previously been successful in bringing crypto’s bad actors to justice, has given up on tracking down criminals. Borg stated that the ASC is still working towards putting a stop to scams involving metaverse real estate and that they hope to issue orders against those involved in the scams once they have been identified.