Proactive Investors - Stoner Cats, an NFT-linked web series by the controversy-stricken celebrity couple Mila Kunis and Ashton Kutcher, has been fined US$1 million and ordered to destroy all its digital tokens after the US Securities and Exchange Commission (SEC) declared it was selling unregistered securities.
Launched back in 2021, Stoner Cats was an adult animated television series featuring actors such as Chris Rock, Seth McFarlane and Dax Shepard as well as crypto figures Gary V and Ethereum co-founder Vitalik Buterin.
Featuring a story about “house cats that become sentient after being exposed to their owner’s medical marijuana”, the show was only available to customers who bought one of the 10,000 NFTs, worth around US$800 each.
Claiming each time a Stoner Cats NFT was resold the original owner would receive a 2.5% royalty, the show told buyers the success of the series would directly impact the success of the purchase.
Promoting the resale of these NFTs on its Twitter account, the adult animation suggested to investors that they could receive a return if they were to buy one, something which caught the attention of the SEC.
A meme posted on Stoner Cats' Twitter
Believing the Stoner Cat NFTs were being marketed as securities despite not having the correct investment contract, the SEC fined the organisation, ordered all NFTs in its possession to be destroyed and created a Fair Fund for people financially harmed.
“Regardless of 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.