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Qualified Stoner Cats NFT Investors Will Receive $1 Million In Compensation

Key Points:

The SEC is distributing $1 million in penalties from Stoner Cats 2 LLC after the company violated securities laws.
Investors who held or sold Stoner Cats NFTs before September 2023 are eligible for compensation through a “fair fund.”

According to Bitcoin.com, the Securities and Exchange Commission announced a plan for the distribution of funds from Stoner Cats 2 LLC after the company was fined for violating securities laws.

SEC Distributes Penalties from Stoner Cats NFT Violation

The enforcement action follows an investigation into the unregistered sale of NFTs linked to the animated series Stoner Cats. The series, backed by actress Mila Kunis with voices from Kunis, Ashton Kutcher, Chris Rock, and Ethereum co-founder Vitalik Buterin, sold 10,320 NFTs at $800 each, raising $8.2 million.

The SEC found that the Stoner Cats NFT offering had been the sale of crypto asset securities in violation of the Securities Act. To this end, Stoner Cats 2 LLC will have to pay a fine of $1 million and create a “fair fund” for reimbursement to affected investors. Those who held or sold Stoner Cats NFTs prior to September 12, 2023, will be compensated through the fair fund payment, though claims are paid only if more than $20.

To qualify for reimbursement, investors must submit validated claims, and the claims process will include strict checks for compliance with U.S. sanctions. Any remaining funds will be directed to the U.S. Treasury. A fund administrator will oversee the distribution and ensure transparency through regular reports.

NFT Marketplaces Impose Restrictions on Stoner Cats Collection

The Securities and Exchange Commission’s ruling had imposed restrictions on the Stoner Cats NFTs in the marketplaces of OpenSea and Blur, among others. The collection has not been delisted, but OpenSea confirmed that users can no longer purchase, sell, or transfer the Stoner Cats NFTs. Users can still view and search the listings.

This is the second NFT project the SEC has taken on for similar violations after it cracked down on the podcast studio Impact Theory in August 2023.

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Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.