The individual behind Stoner Cats has been ordered to pay a $1 million penalty to the SEC after being accused of selling unregistered NFTs valued at $8 million.

The creator of the animated web series Stoner Cats has been ordered to pay a $1 million fine to the U.S. Securities and Exchange Commission (SEC) after facing allegations of conducting an unregistered sale of cryptocurrency asset securities through NFTs, as announced by the regulatory body today.

Stoner Cats, one of the pioneering shows funded by NFTs, follows a family of feline characters with voices provided by prominent figures such as Jane Fonda, Chris Rock, and Ethereum’s Vitalik Buterin. The first six episodes are exclusively accessible to NFT holders.

Stoner Cats 2 LLC, without admitting or denying wrongdoing, has reached an agreement to settle charges related to its unlawful accumulation of over $8 million by selling more than 10,400 NFTs at approximately $800 each. These NFTs sold out within minutes in July 2021. Furthermore, Stoner Cats has committed to destroying all of its owned NFTs and publishing the order’s notice on its website and social media platforms.

According to Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement: “Regardless of whether your offering involves beavers, chinchillas, or NFTs based on animals, the federal securities laws focus on the economic reality of the offering, not the labels or the underlying assets used. This determines whether it qualifies as an investment contract and, consequently, a security.”