The U.S. Securities and Exchange Commission has charged the creator of the Stoner Cats animated web series with conducting an unregistered offering of cryptocurrency asset securities by selling non-fungible tokens. The investor will pay a $1 million civil fine to resolve the accusations, the regulator announced on Wednesday.
When accused of raising $8.2 million illegally in July 2021 by selling 10,320 NFTs for around $800 apiece, which sold out in 35 minutes, Stoner Cats 2 LLC did not admit or deny any crime.
Additionally, it consented to get rid of all NFTs it had. Tokens that represent an asset, such as a work of digital art, are referred to as NFTs.
Requests for comment from a Stoner Cats lawyer did not immediately elicit a response.
Following a settlement with Impact Theory LLC last month, Wednesday’s agreement marks the second resolution in the SEC’s campaign against NFTs.
The SEC is going after companies that create or trade digital assets, claiming that they are securities that need to be regulated by the SEC because they resemble stocks or bonds.
An adult cartoon series called Stoner Cats centers on domestic cats who develop sentience after coming into contact with their owner’s medical marijuana, which is meant to treat the early stages of Alzheimer’s disease.
From July 2021 to December 2022, six episodes of the show were shown, and a number of well-known performers, including Jane Fonda, Mila Kunis, Ashton Kutcher, Seth MacFarlane, and Chris Rock, were among the cast members.
Online viewing of “Stoner Cats” was made only available to NFT holders. Investors were informed that NFTs functioned similarly to tickets and that their performance was correlated with the success of the show.
The SEC’s Carolyn Welshans said in a statement that “Stoner Cats wanted all the advantages of selling and offering security to the public yet ignored the legal responsibilities associated with doing so.”
Republicans made up two of the five SEC commissioners, and both expressed opposition to the move, arguing that the regulator should instead set forward “some clear guidelines for artists as well as other creators that want to experiment with NFTs.”