The Securities and Exchange Commission continues to evade crypto enforcement as it accuses yet another non-fungible token project of selling unregistered securities.
The federal agency announced Wednesday that it has sued its makers Stoner catsan animated web series about “a woman who uses medical marijuana to alleviate her early Alzheimer’s symptoms and her beautiful cat family,” according to the website, for raising about $8 million by selling more than 10,000 NFTs for about $800 per piece.
The SEC alleges that this sale, which sold out in about 35 minutes, was essentially an unregistered securities offering as the show’s creators and producers, specifically actress Mila Kunis, allegedly led NFT purchasers to believe that their investing in a Stoner Cats NFT would lead to a profitable resale through a secondary market.
The web series featured a who’s who of Hollywood, with Ashton Kutcher, Chris Rock, Jane Fonda, Michael Buble and Ethereum founder Vitalik Buterin as cast members, according to the show’s website.
Sound Ventures, an Ashton Kutcher-led venture capital firm whose team members were listed as members of the project, did not immediately respond to a request for comment from Fortune. Maaria Bajwa, director of Sound Ventures and member of the Stoner Cats staff, did not immediately respond to a request for comment on LinkedIn.
Stoner Cats 2 LLC, the legal entity behind the NFT sale, agreed to a cease and desist order from the SEC and a $1 million fine, according to a statement from the agency.
“Regardless of whether your offering involves beavers, chinchillas, or animal-based NFTs, under federal securities laws, 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,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in the statement.
The enforcement against Stoner Cats follows a year of accelerated SEC lawsuits against crypto founders, exchanges and now NFT projects.
After indicting a string of well-known crypto personalities towards the beginning of the year, including Do Kwon, founder of the so-called stablecoin TerraUSD, and Justin Sun, founder of TRON, the SEC took aim at some of the biggest companies in crypto, the most of them, especially the Binance and Coinbase exchanges.
In late August, the SEC then turned its sights on NFTs, accusing Los Angeles-based entertainment company Impact Theory of raising about $30 million through NFT sales, which the agency said was an unregistered securities offering.
In the most recent lawsuit against Stoner Cats, the agency brought a similar case, but two commissioners – Hester Pierce and Mark Uyeda – disagreed in a statement: “If we were to apply the securities laws to physical collectibles in the same way that If we apply them to NFTs, artists’ creativity would languish in the shadow of legal ambiguity.”