Stoner Cats 2 LLC Faces SEC Charges Over Unregistered NFT Offering; Agrees to Cease-and-Desist Order and Penalties
Summary:
Stoner Cats 2 LLC, the company behind the animated series, has agreed to a cease-and-desist order and other measures after being charged with conducting an unregistered offering of NFTs. The SEC stated that over 10,000 NFTs were sold for approximately $800 each, with proceeds used to fund the series. A star-studded cast including Mila Kunis and Ashton Kutcher was involved in the project. SC2 will pay a $1 million civil penalty and destroy all NFTs in its possession. This is the SEC's first enforcement action against an NFT issuer.
Stoner Cats 2 LLC (SC2), the company responsible for the Stoner Cats animated series, has reached an agreement with the United States Securities and Exchange Commission (SEC) to comply with a cease-and-desist order and other measures. The SEC had charged SC2 with conducting an unregistered offering of crypto asset securities in the form of nonfungible tokens (NFTs). The sale of over 10,000 NFTs, priced at approximately $800 each, took place on July 27, 2021, and lasted for 35 minutes. The proceeds from the sale were utilized to finance the series. The NFTs granted buyers access to the Stoner Cats animated series, which centered around an elderly woman and her cats engaging in cannabis consumption. The first episode premiered just two days after the NFT sale. Actress Mila Kunis spearheaded the Stoner Cats project, collaborating with established NFT creators. The series featured a star-studded cast, including Ashton Kutcher, Chris Rock, Dax Shepard, Gary Vaynerchuk, Jane Fonda, Michael Buble, Mila Kunis, Seth MacFarlane, and Vitalik Buterin. The SEC stated that SC2 marketed the potential secondary market for the NFTs, suggesting that the qualifications of the creators and the prominence of the actors would drive the NFTs' value higher. SC2 received a 2.5% royalty on every secondary sale of the NFTs, which saw at least 10,000 subsequent transactions amounting to over $20 million, according to the SEC. As part of the settlement, SC2 will pay a civil penalty of $1 million, and a Fair Fund will be established to reimburse affected investors. Furthermore, SC2 is obligated to dispose of all NFTs under its possession or control. The company neither admitted to nor denied the charges. This marks the SEC's first enforcement action against an NFT issuer since it filed unregistered securities sales charges against Impact Theory in August.
Published At
9/13/2023 4:38:22 PM
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