SEC v. Stoner Cats

The SEC charged Stoner Cats 2 LLC (SC2) with conducting an unregistered offering of crypto asset securities in the form of non-fungible tokens (NFTs) sold on July 27, 2021, raising approximately $8 million from over 10,000 investors in 35 minutes. The NFTs, tied to the Stoner Cats animated web series, were marketed as investments with potential profits from secondary market resales, driven by SC2’s expertise, Hollywood connections, and a 2.5% royalty on secondary transactions. The SEC determined the NFTs were investment contracts and thus securities, violating the Securities Act of 1933. SC2 settled, agreeing to a $1 million civil penalty, destruction of all NFTs in its possession, and establishment of a Fair Fund for investors.