Will the NFTs be destroyed?
Will NFT holders lose benefits?
How will Stoner Cats compensate NFT buyers?
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Today, the United States Securities and Exchange Commission (SEC) announced that “Stoner Cats,” the animated, NFT-backed web series created by Mila Kunis’s production studio, violated federal securities laws when it sold NFT passes to view the video content. But what happens now?
The company behind the show, which leveraged the voice talents of numerous A-list stars including Kunis, Ashton Kutcher, Chris Rock, and Jane Fonda, has agreed to pay a $1 million fine without admitting or denying the SEC’s findings, the agency said.
The SEC’s order implies that following today’s action, Stoner Cats will no longer functionally exist as an NFT community. But fate will befall the Stoner Cat NFTs currently in circulation, and the six-episode series they were designed to unlock?
Per the SEC, as a condition of today’s settlement, Stoner Cats has agreed to destroy all NFTs in its possession. This can be achieved through the process of “burning,” in which NFTs are sent to a digital wallet with no private key, effectively locking them up for eternity.
The producers and executives behind Stoner Cats can only burn NFTs in their possession, however—on-chain tokens can only be burned by their respective holders. In other words, the more than 5,000 unique wallet holders that own Stoner Cats NFTs on Ethereum need not fear for the safety of their tokens.
Technically speaking, there is no way to destroy those NFTs without holders’ consent. They can be made effectively worthless, though, if their utility—including granting access to the “Stoner Cats” web series, behind-the-scenes bonus features, and the Stoner Cat community—is neutralized by the creators.
The “Stoner Cat” web video series is currently hosted on Arweave, a decentralized blockchain protocol. A statement on the Stoner Cats website reads that the series’ creators do not control that content, and now that it lives on Arweave, it can never be removed.
Decrypt reached out to the Stoner Cats project and Kunis’ producing partners to ask how they plan to adjust access to the web series, if at all, but did not immediately receive a response. The producers also did not immediately respond to questions as to how they plan to address or destroy remaining Stoner Cat NFTs still under their control.
According to the SEC, the $1 million fine paid by Stoner Cats will be repurposed to establish a “Fair Fund” to compensate “injured investors” who bought Stoner Cats NFTs. Neither the SEC nor the show’s creators immediately responded to questions from Decrypt regarding how that money will be doled out, or who will qualify for a payment.
Perhaps on hopes that current holders will be eligible for compensation, Stoner Cats NFTs have, as of this morning, rapidly become more desirable, not less: the collection’s floor price has skyrocketed 163% in the last three hours alone, to roughly $79 worth of Ethereum at writing.