The U.S. Securities and Exchange Commission (SEC) has filed charges against Stoner Cats, a non-fungible token (NFT) collection backed by actress Mila Kunis, which it considers unregistered securities.
In a new press release, the regulator says it will charge Stoner Cats, which has so far raised $8 million to fund an animated web series of the same name, for “conducting an unregistered offering of crypto -assets.”
According to the SEC, the advertising campaign for the NFT collection highlighted the ability for owners to sell their NFTs to others through the secondary market and emphasized that the NFT collection was backed by well-known actors and Hollywood producers, leading investors to expect profits.
As Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated in the press release:
“Regardless of whether your offering involves beavers, chinchillas, or animal-based NFTs, under federal securities law, it is the economic reality of the offering – not the labels you put on it or the underlying objects – that determines what constitutes an investment is. contract and therefore a security.
Here, the SEC’s order shows that Stoner Cats marketed its knowledge of crypto projects, touted that the price of their NFTs could rise, and took other steps that led investors to believe they would profit from selling the NFTs on the secondary market.
Not surprisingly, the order shows, Stoner Cats sold its entire stock of NFTs in just 35 minutes, netting over $8 million in proceeds, most of which was then resold on the secondary market within months (not kept as collector’s items). ”
The company has agreed to pay a $1 million fine for the charges.
Last month, the SEC announced similar charges against Los Angeles-based entertainment company Impact Theory, alleging that the company offered unregistered securities when it sold NFTs to its audience.
According to the regulatory body, selling NFTs with promises of future profits makes them qualify as investment contracts, which in turn makes them securities offerings.
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Featured image: Shutterstock/Daronk Hordumrong/archy13