US regulator fines Stoner Cats creator for offering NFTs, Legal News, ET LegalWorld | Court Practice News

The creator of the popular Stoner Cats animated web series will pay a $1 million civil fine to settle U.S. Securities and Exchange Commission charges it conducted an unregistered offering of crypto asset securities by selling non-fungible tokens, the regulator said on Wednesday.

Stoner Cats 2 LLC did not admit or deny wrongdoing in settling charges it illegally raised $8.2 million in July 2021 by selling 10,320 NFTs for about $800 each, which sold out in 35 minutes.

It also agreed to destroy all NFTs in its possession. NFTs refer to tokens that represent an asset such as a piece of digital art.

A lawyer for Stoner Cats did not respond immediately to requests for comment.

Wednesday’s settlement is the SEC’s second in its crackdown on NFTs, following a settlement with Impact Theory LLC last month.

The SEC is targeting firms involved in the production or trading of digital assets, saying they represent securities akin to stocks or bonds that need to be overseen by the SEC.

Stoner Cats is an adult animated series about house cats that become sentient after being exposed to their owner’s medical marijuana, which is used to alleviate early Alzheimer’s symptoms.

Six episodes were released from July 2021 to December 2022, and the cast included several well-known actors like Jane Fonda, Mila Kunis, Ashton Kutcher, Seth MacFarlane and Chris Rock.

The NFTs provided holders with exclusive access to watch “Stoner Cats” online. Investors were told the NFTs were like a ticket, and that “the more successful the show, the more successful your NFT” will be.

“Stoner Cats wanted all the benefits of offering and selling a security to the public but ignored the legal responsibilities that come with doing so,” SEC official Carolyn Welshans said in a statement.

Two of the five SEC commissioners, both Republicans, opposed the action, saying in joint statement that the regulator should instead lay out “some clear guidelines for artists and other creators who want to experiment with NFTs”.

  • Published On Sep 13, 2023 at 11:43 PM IST

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