{"id":60852,"date":"2023-09-14T08:12:41","date_gmt":"2023-09-14T12:12:41","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/sec-fines-stoner-cats-nfts-creator-1-million-for-securities-violation\/"},"modified":"2023-09-14T08:12:44","modified_gmt":"2023-09-14T12:12:44","slug":"sec-fines-stoner-cats-nfts-creator-1-million-for-securities-violation","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60852","title":{"rendered":"SEC Fines Stoner Cats NFTs Creator $1 Million for Securities Violation"},"content":{"rendered":"
\n

The company behind Stoner Cats<\/strong> non-fungible tokens (NFTs) has to pay a $1 million fine and destroy all its NFTs per a settlement with the US Securities and Exchange Commission<\/strong> (SEC).<\/p>\n

According to the Wednesday press release, the SEC charged Stoner Cats 2 LLC<\/strong> (SC2) with conducting an unregistered offering of cryptoasset securities in the form of NFTs that raised approximately $8 million from investors to finance an animated web series called ‘Stoner Cats’.<\/p>\n

Stoner Cats NFTs launched in 2021 ahead of the same-named series featuring sentient cats of one Ms. Stoner, created by actress Mila Kunis.\u00a0<\/p>\n

As reported, Ethereum<\/strong> co-founder Vitalik Buterin was set to be a part of the project, as well as Jane Fonda, Seth McFarlane, Ashton Kutcher, and Chris Rock.<\/p>\n

However, per the US regulator’s announcement,<\/p>\n

\n

“Without admitting or denying the SEC\u2019s findings, SC2 agreed to a cease-and-desist order and to pay a civil penalty of $1 million. […] SC2 also agreed to destroy all NFTs in its possession or control and publish notice of the order on its website and social media channels.”<\/p>\n<\/blockquote>\n

The project announced the order.<\/p>\n

<\/oembed><\/figure>\n

Additionally, the order established a “Fair Fund” to return the money investors used to buy these NFTs.\u00a0<\/p>\n

Prior to the series release, in July 2021, there was an NFT sale of 10,420 stoner cats for some $800 each, which sold out in 35 minutes.<\/p>\n

The SEC argued that the company’s marketing team – before and after the public sale – promoted the benefits of owning the tokens, including the option to resell them on the secondary market.\u00a0<\/p>\n

The SC2 team also emphasized its expertise as Hollywood producers, the participation of celebrities, and its own knowledge of crypto projects, thus leading investors to “expect profits” via a successful web series that could increase the NFTs’ resale value.<\/p>\n

The order further stated that,<\/p>\n

\n

“SC2 configured the Stoner Cats NFTs to provide SC2 a 2.5 percent royalty for each secondary market transaction in the NFTs and it encouraged individuals to buy and sell the NFTs, leading purchasers to spend more than $20 million in at least 10,000 transactions.”<\/p>\n<\/blockquote>\n

Per Gurbir S. Grewal, Director of the SEC\u2019s Division of Enforcement, be it beavers, chinchillas, or any other animal-based NFT, “the economic reality of the offering” defines a security, “not the labels you put on it.”<\/p>\n

Carolyn Welshhans, Associate Director of the SEC\u2019s Home Office, was quoted as saying that Stoner Cats wanted the benefits of selling a security to the public, while ignoring the legal responsibilities that come with it.<\/p>\n

____<\/p>\n

Learn more:<\/h3>\n

– Vitalik Buterin Makes Curious Cameo in Kutcher and Kunis\u2019 \u2018Krypto\u2019 Video
– Ashton Kutcher Invested in Bitcoin Despite Wife\u2019s Advice<\/p>\n

– SEC Chair Gensler: Crypto Industry Plagued by Misconduct and Legal Challenges
– Ripple CEO Advises Crypto Startups to Avoid US, Suggests Jurisdictions with Smart Policies<\/p>\n<\/p><\/div>\n