Sales of Mila Kunis-backed Stoner Cats NFTs jump after SEC crackdown
- The SEC claimed that the proceeds from the sale of NFTs were used to finance the web series.
- Surprisingly, sales volume for the collection spiked dramatically since the announcement.
After fungible crypto tokens, the U.S. Securities and Exchange Commission (SEC) began to tighten its grip on the non-fungible token (NFT) landscape.
The creator of the popular animated series, Stoner Cats, was prosecuted by the regulatory agency for indulging in an unregistered offering of crypto asset securities in the form of NFTs, according to an order dated 13 September. The production company Stoner Cats 2 LLC (SC2), backed by Hollywood couple Mila Kunis and husband Ashton Kutcher, was fined $1 million as part of the settlement.
The SEC claimed that the proceeds from the sale of NFTs, roughly $8 million, were used to finance the web series, which also included Kutcher and Kunis as voice artists.
The cats are out of the bag
The order alleged that the creators employed sophisticated marketing techniques to boost the sale of the collectibles. These included a 2.5% royalty for NFT holders for every transaction done on the secondary market. As a result, most owners started reselling their NFT’s instead of holding them.
Moreover, the presence of celebrities led people into believing that resale value of the NFTs would continue to rise in the secondary market. The SEC noted,
“Here, the SEC’s order finds that Stoner Cats marketed its knowledge of crypto projects, touted that the price of their NFTs could increase and took other steps that led investors to believe they would profit from selling the NFTs in the secondary market.”
Without admitting or denying SEC’s charges, SC2 agreed to pay the $1 million fine. As part of the settlement, it was also directed to destroy all NFTs in its control with immediate effect.
Stoner Cats’ sales jumps
Surprisingly, within hours of the announcement, sales volume for the collection spiked dramatically, according to data from OpenSea. From daily average sales of 2 over the last two weeks, the count went past 100 as of this writing.
Furthermore, the average price has more than quadrupled from the start of the week. This indicated increased demand for the outlawed NFT.
Another case of regulation by enforcement?
The Howey test is a legal criterion used to assess whether a transaction constitutes a security. According to the test, a transaction is a security if it is – An investment of money, in a common enterprise, with the expectation of profit, to be derived from the efforts of others. The SEC believes the sale of Stoner Cats NFTs falls under this definition.
While this regulation has been applied to securities for many years, large entities like Coinbase, which is embroiled in a legal battle with the SEC, have criticized the extension of the rule to crypto assets.