The federal government’s crypto crackdown is hitting Hollywood again — this time targeting a starry animated Web3 series featuring the voices of Ashton Kutcher, Mila Kunis, Chris Rock, Jane Fonda, Seth MacFarlane and more.
The Securities and Exchange Commission on Wednesday filed charges against the creators of the NFT cartoon series Stoner Cats for an unregistered offering of NFTs. Kunis and Kutcher not only lent their voices to the cast, but also went on a media tour to tout the project.
The charges were filed against Stoner Cats 2 LLC, which agreed to pay a $1 million civil penalty and to establish fund to return money to the buyers of the NFTs, the SEC said in a statement. It did not admit or deny any wrongdoing.
Stoner Cats launched in 2021 as an animated series funded by selling NFTs to buyers. The series is about the wacky adventures of cats who learn to talk after inhaling medical marijuana. The NFT offering (which raised more than $8 million) gave buyers access to watch the series, their own “Stoned Cat” avatar, and promised the creation of future animated projects.
According to its website, Stoner Cats was created by Ash Brannon, Chris Cartagena and Sarah Cole based on Cole’s experience with her own mother. Kunis and her Orchard Farm Productions came on board and they “formed a formidable collective of voice talent, animators, and creatives of all kinds to come together with technology and NFT experts (including the brilliant minds behind CryptoKitties) to bring this story to life using NFTs.”
More than ten thousand unique NFTs were created and the 6-episode series was only accessible to NFT owners — who also had access to the creators of the show “making it one of the first projects to use NFTs to create a community of holders who get to see behind the curtain as an animated series is made and interact directly with top-level Hollywood talent.”
The SEC says that the illicit funds were used to pay the voice cast, as well as the animators, writers and others involved in the production.
“Regardless of whether your offering involves beavers, chinchillas or animal-based NFTs, under the federal securities laws, it’s the economic reality of the offering – not the labels you put on it or the underlying objects – that guides the determination of what’s an investment contract and therefore a security,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in a statement. “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. It’s therefore hardly surprising, as the order finds, that Stoner Cats sold its entire supply of NFTs in just 35 minutes, generating proceeds of over $8 million, most of which were then resold – not held as collectibles — in the secondary market within months.”
The production of Stoner Cats involved well-known writers, animators, and voice actors. The team of writers and animators were recognized for their work on major animated films and motion pictures. As compensation, SC2 paid the actors and artists (as well as the producers and managerial and technical professionals on the project) all of the offering proceeds and all of the royalties it generated from secondary market sales in the Stoner Cats NFTs.
No individuals are named in the SEC’s order, and the agency wouldn’t provide those details. An SEC spokesperson said in a brief statement, “We decline comment beyond our public filings on the matter.”
Reps for Kunis and Kutcher, who recently received widespread backlash to letters they wrote to the court in support of former That 70s Show cast member Danny Masterson ahead of his sentencing, have not yet responded to a request for comment.
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