Non-fungible tokens tied to the Stoner Cats web series starring Mila Kunis and Ashton Kutcher were illegally offered and used to finance the series, according to a Securities and Exchange Commission (SEC) order on Wednesday. NFTs that generate royalties are unregistered securities.

The order states that in July 2021, the production company behind the animated show Stoner Cats 2 (SC2) will collect at least 100,000 Stoner Cat NFTs representing characters from the eponymous web animated show concept. It claims to have generated $8 million in sales. The collection's initial pre- and post-sale art goods "linked the show's success to the value of the NFTs," fueling investors' hopes of profiting from it, according to SEC filings.

“SC2 conducted an extensive media campaign to promote Stoner Cats NFTs before and after the offering, as the NFTs were traded on the secondary market,” the SEC said in its order. Stoner Cats NFT. ”

The company did not admit or deny any wrongdoing in the settlement, but agreed to pay a $1 million fine and destroy any remaining NFTs it held, according to the order. They also agreed to establish a fund to refund individuals who invested in the tokens.

Stoner Cats is an animated web show about anthropomorphic cats who gain "sentience" through exposure to marijuana smoke, according to the series' website. Six episodes were premiered from July 2021 to December 2022. The show will feature Ethereum founder Vitalik Buterin as Lord Catchington, as well as voice actors from several Hollywood actors including Kunis, Seth McFarland, Chris Rock, Jane Fonda, Dax Shepard and Kutcher. is appearing.

The order states that the company "will reimburse the actors and artists (as well as the project's producers, management, and technical experts) for all of the proceeds of the offering, as well as all royalties generated from secondary market sales of Stoner Cats NFTs. paid.''

Kunis' production company, Orchard Farm Productions, backed the series, according to the show's website. Orchard Farm executives did not respond to requests for comment.

According to the SEC, Stoner Cats NFT holders were incentivized to trade their NFTs and received a 2.5% royalty on each secondary market transaction involving the collectibles. According to regulators, this led to individuals buying and selling NFTs in at least 10,000 secondary transactions worth more than $20 million. Additionally, at least 20% were resold before the first episode of the Stoner Cats web series aired, the order shows.

This is not the first time regulators have focused on allegations of securities offerings by NFT makers. Last month, the SEC filed an enforcement action against NFT maker Impact Theory.