Creator of Stoner Cats animated series starring Ashton Kutcher and Mila Kunis is fined by SEC for selling NFTs

• The SEC fined the creator of Stoner Cats NFTs $1 million for selling unregistered securities.
• Stoner Cats included an animated web series that starred Ashton Kutcher, Mila Kunis, and Chris Rock.
• At its peak in August 2021, a Stoner Cat NFT sold for nearly $3 million. Today they're worth about $80.

The company behind Stoner Cats was ordered to pay a $1 million fine on Wednesday in a settlement with the Securities and Exchange Commission.

Stoner Cats 2, LLC sold 10,000 unique NFTs in 2021, using the $8 million in proceeds from the sale to fund the production of an animated web series about cats that smoke their caregivers' marijuana.

The show starred Mila Kunis, Ashton Kutcher, Jane Fonda, Chris Rock, and even included Ethereum founder Vitalik Buterin.

Only holders of the NFT are able to view the series. None of the celebrities that starred in the show were involved with the SEC settlement.

According to the SEC, Stoner Cats NFTs were marketed to the public with enough specific benefits that alluded to the idea that you could potentially make a profit from buying them and re-selling them in the secondary markets.

"As part of the marketing campaign, the SC2 team emphasized its expertise as Hollywood producers, its knowledge of crypto projects, and the well-known actors involved in the web series, leading investors to expect profits because a successful web series could cause the resale value of the Stoner Cats NFTs in the secondary market to rise," the SEC explained.

That violated the Securities Act of 1933, as the NFTs were not registered as a security before their sale to the public.

"Registration of securities, including crypto asset securities, protects investors by providing them with disclosures so they can make informed investing decisions. Stoner Cats wanted all the benefits of offering and selling a security to the public but ignored the legal responsibilities that come with doing so," SEC associate director Carolyn Welshhans said.

At its peak in August 2021, one Stoner Cat NFT sold for 931 ether, according to data from OpenSea. Based on ether prices at the time, the sale of the Stoner Cat NFT was worth nearly $3 million. Today, you can buy a Stoner Cat NFT for about .045 ether, or $80, representing a 99.99% decline from its peak. But for most Stoner Cat NFTs, they never eclipsed their initial offering price of $800.

The SEC also ordered Stoner Cats 2, LLC to destroy all of the NFTs it currently holds and issue a notice of the violation across its website and social media accounts.