This week just got worse for married actor couple Ashton Kutcher and Mila Kunis – the US Securities and Exchange Commission has set fire to an NFT project they were involved in, Stoner Cats.

Sales of the tokens funded an animated web series of the same name, which IMDB says is about "five house cats who mysteriously become sentient" after being exposed to medical cannabis. "With their 'higher' consciousness, they create an absolute catastrophe, forcing them to repeatedly save their beloved owner, Ms Stoner."

As well as starring Kutcher and Kunis, the cast also featured big names like Jane Fonda, Seth McFarlane, Chris Rock, and... Michael Bublé.

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We note it has a [2]4.7/10 rating .

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[5]According to the SEC , Stoner Cats 2 LLC offered [6]10,320 tokens [PDF] for 0.35 ETH each (then valued at approximately $800), which sold out in 35 minutes, raising more than $8 million in the process, with each granting investors access to watch the series.

But they should have stuck with a Netflix subscription because the SEC has deemed Stoner Cats an unregistered security, meaning those investors had no protections, including the ability to identify a money trail when the investment goes belly up.

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Stoner Cats hyped the benefits of owning one of these NFTs, which were configured to return a 2.5 percent royalty to the original holder each time it was resold. This led purchasers to splurge more than $20 million over a minimum 10,000 transactions, the SEC said.

It also accused the project of emphasizing "its expertise as Hollywood producers, its knowledge of crypto projects, and the well-known actors involved in the web series, leading investors to expect profits because a successful web series could cause the resale value of the Stoner Cats NFTs in the secondary market to rise."

It did not.

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"Regardless of whether your offering involves beavers, chinchillas or animal-based NFTs, under the federal securities laws, it's the economic reality of the offering – not the labels you put on it or the underlying objects – that guides the determination of what's an investment contract and therefore a security," said Gurbir S Grewal, director of the SEC's Division of Enforcement.

"Here, the SEC's order finds that Stoner Cats marketed its knowledge of crypto projects, touted that the price of their NFTs could increase and took other steps that led investors to believe they would profit from selling the NFTs in the secondary market. 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."

Carolyn Welshhans, associate director of the SEC's Home Office, added: "Registration of securities, including crypto asset securities, protects investors by providing them with disclosures so they can make informed investing decisions.

"Stoner Cats wanted all the benefits of offering and selling a security to the public but ignored the legal responsibilities that come with doing so."

Without admitting or denying the findings, Stoner Cats 2 LLC is to pay a civil penalty of $1 million and a Fair Fund has been set up to return funds to injured investors. The company must also destroy all NFTs in its possession.

[9]America's financial cops say Impact Theory's NFTs were unregistered securities

[10]Token prison sentence for first convicted NFT insider trader

[11]Sega COO backs away from blockchain

[12]British Prime Minister Sunak's plans for UK NFT on ice

Collectors have [13]flocked to nab Stoner Cats NFTs following the SEC announcement, driving up their price. But it's still a blip compared to highs of early 2022, when the token was first launched.

Stoner Cats is now the second NFT to be called an unregistered security after [14]Impact Theory in August. But like that case, the SEC commissioners were not unanimous as to whether the designation works.

Hester Peirce and Mark Uyeda wrote in their [15]dissenting statement : "While updated for the digital age, the Stoner Cats NFTs are not that different from Star Wars collectibles sold in the 1970s. On the heels of the very successful release of Star Wars in 1977, fan excitement was high. To the delight of millions of children that holiday season, the toy company Kenner sold 'Early Bird Certificate Packages,' redeemable for future Luke Skywalker, Princess Leia, and R2-D2 action figures and membership in the Star Wars fan club. The sales of these certificates helped to build a die-hard community of Star Wars fans. Would those I.O.U. certificates, which could be re-sold, constitute investment contracts? Using the analysis of today's enforcement action, the SEC should have parachuted in to save those kids from Star Wars mania."

They added: "NFT creators, along with other artists, do not get a free pass from the securities laws. In some instances, sales of NFTs may implicate our securities laws. In applying the securities laws in this space, however, the Commission must take care to preserve the ability of artists to sell their work, build a fan base, and involve that fan base in future creative endeavors."

They also argued that investors got what they paid for – "a still image of a character from the series, access to all six episodes of the Stoner Cat series, and the excitement of being part of a popular phenomenon."

Still, whether something is an "unregistered security" is a smart question to ask. It reportedly [16]spared Taylor Swift from legal trouble after she was approached by moribund crypto exchange FTX about a $100 million sponsorship deal. ®

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[2] https://www.imdb.com/title/tt15139516/ratings/?ref_=tt_ov_rt

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[5] https://www.sec.gov/news/press-release/2023-178

[6] https://www.sec.gov/files/litigation/admin/2023/33-11233.pdf

[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZQMuJxiFlqWPaxGQEJyEFwAAAxc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

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[9] https://www.theregister.com/2023/08/29/sec_impact_theory_nft_charges/

[10] https://www.theregister.com/2023/08/23/nft_insider_trading_prison/

[11] https://www.theregister.com/2023/07/11/sega_blockchain_web3/

[12] https://www.theregister.com/2023/03/28/sunaks_plans_for_uk_nft/

[13] https://www.coingecko.com/en/nft/stoner-cats

[14] https://www.theregister.com/2023/08/29/sec_impact_theory_nft_charges/

[15] https://www.sec.gov/news/statement/peirce-uyeda-statement-stonercats-091323

[16] https://www.investopedia.com/taylor-swift-ftx-lawsuit-7482729

[17] https://whitepapers.theregister.com/