The United States Securities and Exchange Commission (SEC) has charged nonfungible token (NFT) project Stoner Cats, sparking a response from commissioners Hester Peirce and Mark Uyeda. They argue that the project’s activity can be considered fan crowdfunding, a common practice among artists.
On Sept. 13, the SEC charged Stoner Cats 2 LLC, the company behind the animated series “Stoner Cats,” with conducting an unregistered crypto-securities offering using NFTs. Stoner Cats 2 LLC has agreed to a cease-and-desist order and other measures imposed by the commission.
The SEC’s case argues that the company marketed the NFTs as having potential for secondary sales and implied that their value would increase. The SEC also highlighted that the company will receive a 2.5% royalty on every secondary sale. According to the SEC, the company sold over 10,000 NFTs for $800 each, with at least 10,000 secondary sales totaling over $20 million.
There has been a lot of talk about cats at the SEC over the past week: and https://t.co/pFXmkGxd2r
— Hester Peirce (@HesterPeirce) September 13, 2023
However, not all SEC commissioners agree with the enforcement action. Commissioners Hester Peirce and Mark Uyeda have released a dissenting statement, arguing that this activity can be seen as fan crowdfunding, which is common in the world of artists and creators.
They believe that instead of taking enforcement actions against NFT projects like Stoner Cats, the SEC should establish clear guidelines for artists and creators who want to use NFTs to support their creative endeavors and engage with their fan communities.
In their statement, the commissioners also draw a comparison between the Stoner Cats NFTs and collectibles sold by Star Wars in the 1970s. They mention that toy company Kenner sold early bird certificates that were redeemable for future action figures and membership to the Star Wars fan club. Peirce and Uyeda argue that, based on the SEC’s actions against Stoner Cats, the commission should have intervened to protect buyers in the 70s.
Additionally, members of the crypto community, such as YouTuber Crypto Tea, have expressed their dissatisfaction with the SEC’s actions. Crypto Tea argues that Stoner Cats raised funds to create and deliver a show, and she personally bought the NFTs to support the show without expecting any profits.
An artist should always be able to say “buy my art, it will become the most expensive art in the Universe”.
To forbid an artist from making an ostentatious claim about the value of their own work would dull the world.
— toly (@aeyakovenko) September 14, 2023
Anatoly Yakovenko, co-founder of Solana, also shared his opinion on the matter. He believes that artists should not be prohibited from making claims about the value of their work, as doing so would “dull the world.”