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Stoner Cats NFTs Settle with SEC: $1 Million Fine and NFT Destruction

CryptoStoner Cats NFTs Settle with SEC: $1 Million Fine and NFT Destruction

The company responsible for Stoner Cats non-fungible tokens (NFTs) has reached a settlement with the US Securities and Exchange Commission (SEC), agreeing to pay a hefty $1 million fine and destroy all its NFTs. The SEC accused Stoner Cats 2 LLC (SC2) of conducting an unregistered offering of cryptoasset securities through NFTs, which had raised approximately $8 million for financing the ‘Stoner Cats’ animated web series.

Stoner Cats NFTs were introduced in 2021, connected to a series featuring animated, sentient cats. Notable figures like Ethereum co-founder Vitalik Buterin, Jane Fonda, Seth McFarlane, Ashton Kutcher, and Chris Rock were involved in the project.

As part of the settlement, SC2 neither admitted nor denied the SEC’s findings but agreed to a cease-and-desist order. They will pay a civil penalty of $1 million and destroy all NFTs in their possession, while also publishing the order on their website and social media platforms. A “Fair Fund” will be established to reimburse investors for the funds they used to purchase these NFTs.

The SEC argued that SC2’s marketing efforts, both before and after the public sale, promoted the NFTs as investment assets with resale potential. The company emphasized its Hollywood producer expertise, celebrity involvement, and knowledge of crypto projects, leading investors to anticipate profits from the web series, which would theoretically boost NFT resale values.

Furthermore, the SEC order noted that SC2 designed Stoner Cats NFTs to provide the company with a 2.5 percent royalty for each secondary market transaction, actively encouraging NFT buying and selling that resulted in over $20 million in transactions involving at least 10,000 NFTs.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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