The firm behind Stoner Cats non-fungible tokens (NFTs) has to pay a $1 million effective and destroy all its NFTs per a settlement with the US Securities and Exchange Commission (SEC).
According to the Wednesday press launch, the SEC charged Stoner Cats 2 LLC (SC2) with conducting an unregistered providing of cryptoasset securities within the type of NFTs that raised roughly $8 million from traders to finance an animated net collection known as ‘Stoner Cats’.
Stoner Cats NFTs launched in 2021 forward of the same-named collection that includes sentient cats of 1 Ms. Stoner, created by actress Mila Kunis.
As reported, Ethereum co-founder Vitalik Buterin was set to be part of the challenge, in addition to Jane Fonda, Seth McFarlane, Ashton Kutcher, and Chris Rock.
However, per the US regulator’s announcement,
“Without admitting or denying the SEC’s 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.”
The challenge introduced the order.
Additionally, the order established a “Fair Fund” to return the cash traders used to purchase these NFTs.
Prior to the collection launch, in July 2021, there was an NFT sale of 10,420 stoner cats for some $800 every, which offered out in 35 minutes.
The SEC argued that the corporate’s advertising and marketing staff – earlier than and after the general public sale – promoted the advantages of proudly owning the tokens, together with the choice to resell them on the secondary market.
The SC2 staff additionally emphasised its experience as Hollywood producers, the participation of celebrities, and its personal data of crypto tasks, thus main traders to “expect profits” by way of a profitable net collection that would enhance the NFTs’ resale worth.
The order additional said that,
“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.”
Per Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, be it beavers, chinchillas, or every other animal-based NFT, “the economic reality of the offering” defines a safety, “not the labels you put on it.”
Carolyn Welshhans, Associate Director of the SEC’s Home Office, was quoted as saying that Stoner Cats wished the advantages of promoting a safety to the general public, whereas ignoring the authorized duties that include it.
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