Stoner Cats NFT Creators Fined $1 Million by SEC
The creators of Stoner Cats non-fungible tokens (NFTs) have been fined $1 million by the Securities and Exchange Commission (SEC) for selling unregistered crypto securities. Stoner Cats 2 LLC (SC2) paid the fine as part of a settlement with the SEC, without admitting or denying the findings. The animated web series featured well-known actors such as Mila Kunis, Ashton Kutcher, Jane Fonda, Chris Rock, and Ethereum founder Vitalik Buterin. It revolved around house cats that gained sentience after being exposed to medical marijuana. The SEC accused SC2 of conducting an unregistered offering of crypto asset securities that led investors to expect profits from secondary market resales.
Ten Thousand Stoner Cat NFTs Sold Out In 35 Minutes
In 2021, ten thousand Stoner Cat NFTs were sold out within 35 minutes, each priced at $800. The $8 million raised from the sales was used to fund the series. According to the SEC, SC2 was charged with conducting an unregistered offering of crypto asset securities that created expectations of profit among investors in the secondary market. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated that it is the economic reality of an offering that determines whether it is considered an investment contract and therefore a security, regardless of labels or underlying objects.
The SEC also revealed that after the sale, the Stoner Cats Twitter account frequently promoted the sales of NFTs in the secondary market and encouraged public purchases. As part of the settlement, a fund was established to return money to injured investors who purchased the NFTs. SC2 agreed to destroy all NFTs in its possession or control and to publish a notice of the SEC order on its website and social media channels.
Hot Take: Stoner Cats NFTs Face SEC Scrutiny
The creators of Stoner Cats NFTs have been fined $1 million by the SEC for selling unregistered crypto securities. The popular animated web series, featuring famous actors and Ethereum founder Vitalik Buterin, raised $8 million from the sale of 10,000 NFTs in just 35 minutes. The SEC charged Stoner Cats 2 LLC with conducting an unregistered offering that led investors to expect profits from secondary market resales. This case highlights the SEC’s stance on determining what qualifies as an investment contract and a security. The settlement includes the establishment of a fund to reimburse injured investors and the destruction of all NFTs in SC2’s possession.
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