SEC Settles Charges with Creators of “Stoner Cats” Over Unregistered NFTs
The U.S. Securities and Exchange Commission (SEC) has reached a settlement with the creators of the NFT-based web series “Stoner Cats” regarding the alleged offering and sale of unregistered NFTs. This action follows the SEC’s recent crackdown on Impact Theory, a media and entertainment company, for violating securities laws.
In a press release dated September 13, the SEC stated that Stoner Cats 2 LLC violated the Securities Act of 1933 by selling over 10,000 NFTs as unregistered crypto asset securities for around $800 each. The company’s marketing campaign emphasized the benefits of owning the NFT collection, including the ability to resell on secondary markets with Stoner Cats 2 LLC receiving a 2.5% royalty for each transaction.
The SEC also found that Stoner Cat’s marketing team presented themselves as expert Hollywood producers and highlighted the involvement of prominent actors, suggesting that the web series could increase the resale value of the NFTs in secondary markets.
SEC Director’s Statement
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated that it was not surprising that Stoner Cats sold its entire supply of NFTs in just 35 minutes and generated over $8 million in proceeds. He added that most of these NFTs were quickly resold in the secondary market rather than being held as collectibles.
Settlement Details
Without admitting or denying the allegations, Stoner Cats LLC agreed to pay a $1 million civil penalty and abide by a cease-and-desist order. The company is also required to destroy all NFTs in its possession and publish the order on its website and social media pages. Additionally, the SEC ordered the establishment of a Fair Fund to reimburse investors who purchased the NFTs.
Hot Take: SEC Cracks Down on Unregistered NFT Offerings
The SEC’s settlement with the creators of “Stoner Cats” highlights the regulator’s commitment to enforcing securities laws in the digital asset space. This action serves as a reminder to companies and individuals involved in NFT offerings to ensure compliance with registration requirements. The SEC’s intervention aims to protect investors from potential fraudulent activities and promote transparency within the crypto industry.
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