Gambling Apes NFTs promised cut of the profits from casinos built on metaverse platforms and Web 2.
NFT marketplace OpenSea has suspended the trading of “Gambling Apes” NFTs from the Sands Vegas Casino Club after regulators in Texas and Alabama ordered trading to halt as they were categorized as unregistered securities.
Cyprus-based Sand Vegas Casino Club said that holders of the Gambling Apes NFTs can participate in profit-sharing from the proceeds of the casinos.
In an update on its discord, BlackyJefferson21, a community lead for the project, said that the team is working with lawyers and has reached out to Texas and Alabama in “good faith” to discuss the next steps.
Another admin said that the team intends to comply with all laws and regulations but “was previously not subject to any registration requirements, and had not been contacted by any governmental organization regarding registration requirements.”
The team forecasted proceeds of up to $24,480 from the “Gambler” NFTs and up to $81,000 per year from the higher-end “Golden Gambler” NFTs.
“It appears the main issue with the ‘Gambler’ NFTs is that there was an explicit expectation of profit sharing, which appears to run afoul of the SEC’s Howey test,” said Christopher LaVigne, a a partner in the litigation and arbitration team of international law firm Withers.
LaVinge said that if the SEC determines an NFT marketplace is providing a trading platform for securities, it will most certainly take the view that the marketplace is operating as an unlicensed exchange.
OpenSea did not respond to a request for comment from CoinDesk by press time.
The NFTs are now listed at LooksRare and continue to be traded, according to data from Etherscan.
The project’s Twitter profile has been removed, and many of the listed team members haven’t tweeted for months.