It’s Wednesday, and Mila Kunis and Ashton Kutcher have had a terrible week. The SEC charged the Hollywood power couple’s NFT-based web series, “Stoner Cats,” with unregistered securities.
The SEC states, “Stoner Cats is an adult animated television show about house cats that become sentient after being exposed to their owner’s medical marijuana.” One of 10,000 $800 NFTs gave fans exclusive access to the six-episode animated series, which stars Jane Fonda, Chris Rock, and Seth MacFarlane. The show included Vitalik Buterin, Ethereum co-founder.
The original owner received 2.5% royalty on each NFT resale. Stoner Cats promoted NFTs by saying, “the more successful the show, the more successful your NFT will be.”
The Stoner Cats’ social media accounts promoted the resale of these NFTs, which the SEC declared unregistered securities because they strongly suggested a return on investment.
Another great quote from this formal SEC document: “@StonerCatsTV tweeted on September 7, 2021 a meme suggesting that the smartest thing to do during a crypto market dip would be to ‘Buy more ETH & sweep the Stoner Cats floor.’”
This meme is cited in the order:
Stoner Cats paid $1 million to the SEC. There will also be a Fair Fund to compensate NFT buyers. The company must also destroy its NFTs.
The SEC is cracking down on celebrity-backed crypto. Kim Kardashian settled with the SEC for $1.26 million last year for failing to disclose that she was paid to promote EthereumMax’s crypto asset security.
“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, SEC Division of Enforcement director.