Stoner Cats NFTs 'fan crowdfunding' not securities: SEC's Peirce, Uyeda
The United States Securities and Exchange Commission (SEC) charging nonfungible token (NFT) project Stoner Cats sparked feedback from commissioners Hester Peirce and Mark Uyeda, arguing that the project’s activity constitutes fan crowdfunding, which they believe is common for artists.
On Sept. 13, the SEC charged Stoner Cats 2 LLC, the firm behind the animated series dubbed “Stoner Cats,” with conducting an unregistered crypto-securities offering using NFTs. Stoner Cats 2 LLC agreed to a cease-and-desist order and other imposed measures by the commission.
Making its case, the SEC argued that the NFTs were marketed by the company as having potential for secondary sales and implied that their value would rise. In addition, the SEC pointed out that the company will receive a 2.5% royalty on every secondary sale. The SEC highlighted that the company sold over 10,000 NFTs for $800 each, and the proceeds were used to fund the series. Furthermore, there were at least 10,000 secondary sales, worth over $20 million, according to the SEC.
There has been a lot of talk about cats at the SEC over the past week: https://t.co/VHFt4CVEV0 and https://t.co/pFXmkGxd2r
Not everyone within the SEC agrees with the enforcement action. SEC commissioners Hester Peirce and Mark Uyeda published a dissenting statement, arguing that the activity could be considered fan crowdfunding. Pierce and Uyeda argued that this is "a common phenomenon in the world of artists, creators, and entertainers."
They also noted that instead of the SEC’s approach of bringing actions against NFT projects, they should lay down clear rules. The commissioners wrote:
The commissioners also compared the Stoner Cats NFTs to collectibles sold by Star Wars in the 1970s. According
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