On September 13, the US Securities and Exchange Commission (SEC) charged the creators of the Stoner Cat collection, Stoner Cats 2 LLC (SC2). The regulator accused them of "conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs)." Notably, the co-author of this collection is Mila Kunis, a famous American actress. As a result, the price of these NFTs unexpectedly spiked. Let's learn what happened.
SEC’s charges
On July 27, 2021, SC2 sold more than 10,000 NFTs in just 35 minutes, generating approximately $8 million in revenue. Later, the company earned another $20 million through a 2% royalty on each NFT resale.
According to the SEC's press release, the company lured buyers with promises of future growth in the value of these NFTs, thereby violating "the Securities Act of 1933 by offering and selling these crypto asset securities to the public in an unregistered offering that was not exempt from registration."
Carolyn Welshhhans, Deputy Director of the SEC's Department of the Interior, stated that "Stoner Cats wanted all the benefits of offering and selling a security to the public but ignored the legal responsibilities that come with doing so."
Ultimately, both sides reached the following agreement:
💸 The company pays a $1 million fine;
🤝A refund will be issued to all investors who purchased these NFTs;
🔥 The NFTs that remain in the company's possession must be destroyed.
There was a similar outcome in the recent SEC case against the media company Impact Theory NFTs.
About the Stoner Cats collection
The NFTs in the Stoner Cats collection provide access to six episodes of the TV series of the same name. According to the project's website, "Stoner Cats is the story of a woman who uses medical marijuana to alleviate her early Alzheimer's symptoms and her beautiful family of cats who will do literally anything to save her."
The animated series is produced by actress Mila Kunis and Orchard Farm Productions, with participation of other celebrities, including co-founder of Ethereum Vitalik Buterin, comedian Chris Rock, "Family Guy" creator Seth MacFarlane, and actor Ashton Kutcher.
Market reaction
Following the SEC’s press release, NFT marketplaces like Rarible, OpenSea, and Blur suspended the trading of NFTs from this collection on their platforms. However, at the time of publication, they remain available for trading on LooksRare and X2Y2.
According to the NFT Price Floor, despite the SEC’s charges, the prices of these NFTs experienced a significant increase; their floor price surged from 0.0189 ETH on September 13 to 0.0817 on September 14. Currently, the floor price stands at 0.055 ETH.
However, this price spike occurred with not that high trading volume, as there have been only 311 sales in the last month, despite a total of 10,420 NFTs in the collection. Consequently, this growth cannot be called organic.
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