According to the SEC, SC2 sold over 10,000 NFTs at approximately $800 each during a 35-minute sale on July 27, 2021. The funds raised were used to finance a series of films. These NFTs allowed buyers to access the animated series called “Stoner Cats,” which centers around an elderly woman and her marijuana-consuming cats. The first episode of the six-part series was aired two days after the NFT sale.
The “Stoner Cats” project was initiated by actress Mila Kunis, who collaborated with established NFT creators. The star-studded cast included Kunis, Ashton Kutcher, Chris Rock, Dax Shepard, Gary Vaynerchuk, Jane Fonda, Michael Bublé, Seth MacFarlane, and Vitalik Buterin.
The SEC stated in a press release that SC2 promoted NFTs as having potential for resale and implied that the creators’ expertise and the prominence of the cast would increase the NFTs’ value. The NFTs were configured to provide SC2 with a 2.5% copyright fee for each sale. The SEC mentioned at least 10,000 transactions with a total value exceeding $20 million.
In addition to agreeing to the cease-and-desist order, SC2 will have to pay a civil penalty of $1 million. A fund will be established to disburse compensation to “harmed investors.” SC2 will also destroy all NFTs it owns or controls. The company neither admitted nor denied the allegations.
The SEC first brought charges related to the sale of unregistered securities against an NFT issuer in August in a case against Impact Theory.