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The Stoner Cats project’s designers are being sued by the Securities and Exchange Commission (SEC) of the United States for allegedly selling unregistered securities before to the 2021 launch of NFTs (Non-Fungible Tokens).
The company behind the Stoner Cats NFT-based cartoon series has signed a cease-and-desist agreement and will forfeit $1 million as a significant civil penalty. Without the corporation admitting any wrongdoing, a settlement was made. The business has also agreed to sell any leftover NFTs it has and to create a “Fair Fund” to compensate investors who bought NFTs in the first sale.
Stoner Cats has conceived the idea for Stoner Cats came from Orchard Farm Productions, a production company connected to well-known actress Mila Kunis, who also provided the voice of one of the animated feline characters in the show under the umbrella of Orchard Farm Productions, the production studio affiliated with renowned actress Mila Kunis, who also lent her voice to one of the animated feline characters in the series.
According to the SEC’s inquiry, Stoner Cats 2 LLC generated $8 million in total through the sale of Ethereum-based NFTs that acted as tickets to watch the web series. Viewers were given access to a unique program featuring five cats and their owner going on unusual adventures thanks to these NFTs.
Famous actors including Ashton Kutcher, Jane Fonda, Seth MacFarlane (creator of “Family Guy”), and Chris Rock were among the cast members in the star-studded production. In an unexpected turn of events, Ethereum co-founder Vitalik Buterin made his public debut as a taxidermied cat.
Although the A-list celebrities were not specifically named in the SEC’s latest release, it was claimed that their celebrity status was crucial to the NFT marketing strategy.
The regulatory authority also stressed how quickly the NFTs sold out—in only 35 minutes—thanks to the company’s emphasis on the unique benefits of ownership. One of these advantages was the possibility for NFTs to be sold again on secondary markets, which would bring in royalties for the corporation.
“Whether your offering involves beavers, chinchillas, or animal-based NFTs, under the federal securities laws, it’s the economic reality of the offering—not the labels you put on it or the underlying objects—that guides the determination of what’s an investment contract and therefore a security,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.