SEC charges Stoner Cats NFT as unregistered offering
SEC charges an NFT company which raised around 8 million dollars from investors to finance an animated web series called Stoner Cats
The US Securities and Exchange Commission charged Stoner Cats 2, an NFT company which raised around 8 million dollars from investors to finance an animated web series called Stoner Cats. The animated series is produced by Mila Kunis’ production company.
The company used earnings from the sale of 10300 NFTs to pay a number of famous people involved in the project, like Mila Kunis, Ashton Kutcher, Chris Rock, Jane Fonda, or Ethereum founder Vitalik Buterin.
Whenever one of the NFTs was resold, the company received a 2.5 percent royalty. “The royalties created incentives to encourage individuals to buy and sell the NFTs on a secondary markets’ stated the SEC. Because of this SEC ruled Stoner Cats as an unregistered offering.
Stoner Cats 2, paid $1 million in fines, and agreed to destroy all of the NFTs in its possession.
Why does it matter
This is a second decision from the SEC that is tackling the unregistered offerings of the NFT products. While, creating and using NFT is not by any mean illegal, the promises about the profits that will be made with the NFT’s reselling, are clearly in collision with the US laws on financial securities.