SEC Brings Hammer Down on NFTs: Stoner Cats Targeted

Without admitting or denying securities violation charges, Stoner Cats NFT creators have settled with the SEC.

Stoner Cat NFT about to burn the whole courtroom down.
Created by Kornelija Poderskytė from DailyCoin
  • The SEC has brought down another NFT enforcement action.
  • The target has agreed to a settlement, among other conditions.
  • The regulator vowed to continue cracking down on unregistered crypto asset sales.

In a recent development seen to wield the SEC’s authority over digital assets regulation, the U.S. Securities and Exchange Commission has settled charges with the creators of the NFT-based web series “Stoner Cats” over alleged offering and sale of unregistered NFTs.

The enforcement action comes hardly a month after the regulator cracked the whip on Los Angeles-based media and entertainment company Impact Theory, charging the firm with flouting U.S. securities law.

The NFTs Deemed Crypto Asset Securities

In a press release dated September 13, the regulator affirmed that Stoner Cats 2 LLC violated the Securities Act of 1933 by offering and selling over 10,000 NFTs as unregistered crypto asset securities for approximately $800 each.


The allegation stems from the company’s marketing campaign, which highlighted specific benefits of owning the NFT collection, including the ability to resale on secondary markets, where Stoner Cats 2 LLC drew a 2.5% royalty for each transaction.

The SEC’s order also established that Stoner Cat’s marketing team touted itself as an expert Hollywood producer and emphasized the involvement of prominent actors, implying that the web series could potentially cause the resale value of the NFTs to appreciate in secondary markets.

“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,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said.

The Settlement

Without admitting or denying the SEC’s allegations, Stoner Cats LLC agreed to a settlement of $1 million in civil penalty and a cease-and-desist order, which extends to destroying all the NFTs in its possession and publishing the order on its website and social media pages.


The regulator also ordered the company to establish a Fair Fund for reimbursing the “injured investors who paid to purchase the NFT.”

Read why SEC Chair Gary Gensler slammed crypto yet again:
Gary Gensler Slams Crypto Yet Again as Senate Hearing Looms

Stay updated on why some commissioners within the SEC have a different opinion on NFT enforcement:
Cracks Emerge as SEC Dissenters Oppose NFT Enforcement

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Brian Danga

Brian Danga, a Kenyan crypto reporter, is dedicated to delivering breaking news and updates from the cryptocurrency world. With a background as a Web3 writer and project manager, he recognizes the importance of unbiased reporting. Holding an LLB degree from the University of Nairobi, Brian's analytical skills contribute to his accurate news reporting. His personal interests include cooking, watching documentaries, reading, and engaging in intellectual discussions.