SEC charges company behind Stoner Cats NFT series with unregistered securities sale

Stoner Cats 2 LLC (SC2), the institution down the Stoner Cats animated series, has agreed to a cease-and-desist bid and different measures imposed by the United States Securities and Exchange Commission (SEC) aft being charged with conducting an unregistered offering of crypto plus securities successful the signifier of nonfungible tokens (NFTs). 

According to the SEC, SC2 sold much than 10,000 NFTs for astir $800 a piece. The merchantability took 35 minutes and occurred connected July 27, 2021. Proceeds were utilized to money the series. The NFTs allowed purchasers to presumption the Stoner Cats animated series, which revolved astir an aged pistillate and her cats consuming cannabis. The archetypal occurrence of six premiered 2 days aft the NFT sale.

A Stoner Cats promo. Source: X (formerly Twitter)

The Stoner Cats task was spearheaded by actress Mila Kunis, who teamed up with established NFT creators. The series’ formed consisted of Ashton Kutcher, Chris Rock, Dax Shepard, Gary Vaynerchuk, Jane Fonda, Michael Buble, Mila Kunis, Seth MacFarlane and Vitalik Buterin.

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The SEC said successful a connection that SC2 selling the imaginable secondary marketplace for the NFTs and implied that the qualifications of the creators and prominence of the actors would origin the NFTs to emergence successful value. The NFTs were configured truthful that SC2 received a 2.5% royalty connected each secondary sale. There were astatine slightest secondary 10,000 income of the NFTs worthy much than $20 million, the SEC said.

SEC settled its archetypal enforcement enactment involving PFP NFTs. SEC alleges each uniquely generated “Stoner Cat” itself to beryllium a “crypto plus information successful the signifier of a non-fungible token.” Mechanics of the offering were akin to astir fashionable PFP projects. Some of my takeaways… /1

Besides agreeing to the cease-and-desist order, SC2 volition wage a civilian punishment of $1 million. A Fair Fund volition beryllium created for disgorgement to reimburse “injured investors.” SC2 volition destruct each NFTs successful its possession oregon control. The institution did not admit to oregon contradict the charges.

The SEC first brought charges of unregistered securities income charges against an NFT issuer successful August successful its lawsuit against Impact Theory.

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