The SEC proposes compensation for investors in Mila Kunis-backed Stoner Cats NFTs
SEC’s Fund Plan to Compensate Stoner Cats Investors
The Securities and Exchange Commission (SEC) has put forth a plan to distribute funds collected from Stoner Cats 2 LLC in response to securities violations.
According to court documents, Stoner Cats 2 LLC conducted an unregistered sale of NFTs, which led to a violation of federal securities laws. The company, known for the NFT-funded animated series “Stoner Cats” with celebrity backing from Mila Kunis, sold 10,320 NFTs to the public for $800 each, generating $8.2 million in revenue. The SEC determined that these NFTs were classified as crypto asset securities and violated specific sections of the Securities Act of 1933. As a result, the company was fined $1 million, and a Fair Fund was established to compensate affected investors.
Investors who held or sold Stoner Cats NFTs before September 12, 2023, are eligible to receive compensation from a $1 million Fair Fund created from civil penalties. The plan outlines a thorough process for filing claims, verifying eligibility, and distributing funds. Claimants must provide valid documentation, and payments will only be issued for claims exceeding $20. Additionally, wallet transactions will undergo strict scrutiny to ensure compliance with U.S. sanctions. Any remaining funds will be returned to the U.S. Treasury. The fund administrator and tax administrator will oversee claim processing, distribution, and compliance while maintaining transparency through reports and public notices.
The SEC’s enforcement action noted that Stoner Cats’ marketing campaign emphasized potential profits from secondary market sales, leading investors to anticipate financial gains. Without admitting or denying the findings, Stoner Cats 2 LLC agreed to a cease-and-desist order, a $1 million civil penalty, and the destruction of all NFTs in its possession.
The regulator explained, “The Net Available Fair Fund comprises the $1,000,000.00 in civil money penalties collected from the respondent, plus any interest and income earned thereon, less taxes, fees, and expenses.” The proposed plan aims to compensate investors harmed by the violations related to the unregistered sale of Stoner Cats NFTs.
The proposed plan outlines the distribution of the net available fair fund to compensate investors affected by the respondent’s violations in connection with the unregistered sale of Stoner Cats NFTs.
These NFTs must have been acquired from Stoner Cats in the offering on July 27, 2017, and either held or sold by September 12, 2023, as specified by the SEC. The public is invited to provide feedback on the proposed plan within 30 days. The plan, including the fund distribution methodology, is accessible on the SEC’s website, with comments accepted electronically or in writing and made public.