Following Impact Theory being fined US$6 million by the SEC for issuing NFT assets without registration two weeks ago, the SEC once again accused Stoner Cats 2, an animation program production company fully funded by NFT, and ordered it to pay US$1 million and destroy the assets it owned. All NFTs closed.
Stoner Cats features voice acting from Vitalik
Stoner Cats is an animation combined with NFT, about five special house cats (related to magical herbs) and their owners. This NFT functions like a fan token, and holders can watch the animation team’s exclusive content and peripheral products. The most eye-catching thing is that Vitalik Buterin, the founder of Ethereum, also voiced the cat named Catsington, and appeared at the home of American actor and investor Ashton Kutcher for promotion.
(Vitalik quickly explains Ethereum: Ashton Kutcher asked his wife to explain what Ethereum is, but a heavyweight mysterious visitor appeared in the kitchen at home)
SEC accuses its NFTs of being unregistered securities
The U.S. Securities and Exchange Commission (SEC) accused Stoner Cats 2 of selling NFTs that were unregistered crypto-asset securities, and that Stoner Cats 2 used NFTs to raise approximately $8 million from investors to fund its animation production.
According to an SEC press release, on July 27, 2021, Stoner Cats 2 offered and sold over 10,000 NFTs to investors at approximately $800 each, and sold out within 35 minutes. Stoner Cats 2, both before and after it was sold to the public, emphasized the specific benefits of owning NFTs, including the option for owners to resell their NFTs on the secondary market, and led investors to anticipate that the success of the web series could lead to Stoner Cats NFTs are seeing an increase in resale value on the secondary market. And each NFT traded on the secondary market carries a 2.5% royalty, costing buyers more than $20 million in at least 10,000 transactions.
Stoner Cats 2 fined $1 million and required to destroy all NFTs
Without admitting or denying the SEC’s findings, Stoner Cats 2 agreed to pay a $1 million civil penalty and, pursuant to the order, established an equity fund to reimburse investors for the fees they paid to purchase the NFTs. Stoner Cats 2 also agreed to destroy all NFTs in its possession or control and to post notice of the order on its website and social media.
Opposition committee members thought it was not too different from Star Wars collectibles
SEC Commissioners Hester Peirce and Mark Uyeda criticized the SEC's charges. They believed that the SEC should not take arbitrary enforcement actions against NFT projects, but should establish some clear guidelines to support artists and other creators who want to try NFTs. Their efforts create and build fan communities. And said the Stoner Cats NFT is not that different from the Star Wars collectibles sold in the 1970s.
After the success of Star Wars in 1977, it attracted many fans. At the time, Kenner Toys sold "Early Bird Certificate Packs" that could be redeemed for future Luke Skywalker, Princess Leia and R2-D2 action figures as well as memberships to the Star Wars Fan Club. The sale of these certificates helps build a loyal community of Star Wars fans.
Two members questioned:
If these resaleable certificates constitute investment contracts, the SEC should be parading in to save these kids from the Star Wars craze.
This article SEC launches NFT again. What is the difference between Stoner Cats voiced by Vitalik and Star Wars collectibles? First appeared in Chain News ABMedia.
