The Crypto bubble of 2020 and 2021 has essentially collapsed. After peaking in 2021, Crypto trading volume crashed by over 2/3 and remains well under half of the peak levels. The reason is that many people have lost money on their crypto Investments leading to dampened interest by ordinary investors. Crypto scams, illegal crypto exchanges, and even celebrities who have pumped up the prices of cryptocurrencies have been exposed.

and the celebrity endorsement angle is a topic of today's video. And September of 2023, the SEC charged a hodgepodge group of Hollywood celebrities that created Stoner Cats. According to the charges, this project sold unregistered crypto Nfts to the public by using the star power of their team, encouraging their fans to buy the Nfts and profiting off of each transaction. The project was led by celebrity couple Munis, and Ashton Kutcher as well as the creator of Ethereum, Vitalic, Butterine.

So was this project really a scam for celebrities to make millions off of their unsuspecting fans. In in this video, we'll take a deep dive into the story of Stoner Cats, the strange brainchild of two adored Hollywood celebrities, the Russian genius computer programmer who invented Ethereum and good oldfashioned greed. Hey, B yeah, what? What's uh, decentralization? Oh, there's not one person in charge of anything, so it's everybody. keeps everybody else in check, so there's not one big like unit or entity to uphold everybody to the same code with the people holding each other responsible.

Hey babe, yeah, what's Ethereum? So Ethereum is a general purpose blockchain, so aside from a cringeworthy glimpse into the personal lives of Milakunis, Ashton Ccher and Balic Buin, the unlikely friendship between these three people led to the creation of Stoner Cats. Stoner Cats are Nfts of fictional cats that, as the name implies, are so-called Stoners. They were created by a team of famous actors, animators, and voice actors, including Munis, who you might know from that '70s show or as the voice of Meg from Family Guy. Other big names on the project were Ashton Kutcher Chris Rock, and of course Vitalic Buan, the creator of Ethereum.

Each Stoner Cat Nft represents a uniquely generated image of one of the characters from an animated series also called Stoner Cats. 10,420. of these Nfts were created in 2021 at the peak of the Crypto bubble. The creators kept 100 of them for themselves, but sold the remaining Nfts to the public.

The idea was that these Nfts served as a way for holders to get access to the Stoner Cat series funded by the Nfts. Due to the high-profile nature of the production team, they were able to generate a huge amount of public interest in the project and so through the pandemic, created a a piece of uh, a form of entertainment called Stoner Cats that we're releasing in a couple weeks. That is an NF and you can buy such Stoner Cats and then that is your token to then watch a 5 minute long piece of entertainment. The idea behind the Stoner Cats Nfts is that somewhat like fan crowd sourcing for a television series, this allows the production process to cut out the middleman like Netflix or Hulu Instead, all the funds paid by the end consumers goes directly to the producers.

The NFS were initially sold to fund the production of the Stoner Cat series, and on top of that, 2 and 1 12% of each transaction of the Nfts is taken as well. Theoretically, this is an Innovative way to utilize Nfts to bring Video Entertainment into the blockchain. Each Stoner cat was priced at35 eth or around $800 at the time. Although the primary stated purpose of holding an Nft was exclusive access to the show, another highlighted benefit of owning them was for the option to resell the Nfts on the secondary Market It's not hard to see why the idea of buying a Stoner Cat was alluring.

The team behind the project had impressed of credentials, including several Hollywood producers and celebrities. They even had Vitalic Butan, the man who created Ethereum. Investors were told that the more successful the Stoner Cats show became, the more successful the Nft will be. so if the show did well, the idea was that the value of the Nfts would go up.

The offering was a resounding success. All of the Nfts were sold out in about half an hour. On the surface, the idea of using Nfts for an independent TV series seems potentially interesting. Nfts are commonly called digital art, and you could say that an animated series about sentient house cats is a form of art.

Additionally, running on the blockchain is inherently decentralized, which allows the creators to cut out the middleman in the production process, but that's about where the logic ends. There's nothing about the blockchain that enables the idea of an independent television series. The Stoner Cats team portrayed ownership of an Nft like a ticket that allows you access to the content kind of like the login credentials to a Netflix account, but you could achieve the exact same thing by simply putting the series behind a pay wall on their own website. You'd still cut out the middleman.

There's nothing about the Stoner Cats Nfts that makes the process any more efficient or otherwise better. Although the stated primary purpose of the Nfts is that it's all about the Stoner Cats show, even that linkage is hard to justify. The only selling points about the show is a short trailer in the star power of the production team. The animation itself looks amateurish and low production quality.

Each episode is only about 5 minutes long, and there are a total of just six episodes. It feels more like a pet project that someone created during evenings and weekends than a professional production. It's hard to imagine that very many people would be so enthusiastic about such a show that they'd be willing to spend any significant amount of money for Access, especially considering that each Stoner cat was priced at35 eth or approximately $800 for about 100 times the monthly price of a Netflix subscription. Stoner Cats offered one lowbudget series with less than an hour of total runtime.

So why were people so excited about Stoner Cats that the entire inventory of over 10,000 of them sold out in just over half an hour? When the Crypto Market started to deteriorate in the later part of 2021, the Stoner Cats team encouraged people to use the market dip as an opportunity to buy more of the Nfts. If the core purpose of the Stoner Cats was to provide access to the show, why would anyone need more than one Nft? That would be like having multiple net subscriptions. The only other reasonable justification for buying the Nfts is for the ability to trade them on the secondary market and the hopes of making a profit. There ended up being significant trading activity in Stoner Cats Nfts on the secondary Market Some sales priced them at over $100,000 worth of Eth each.

The Stoner Cats team received a 2.5% royalty fee on each transaction, giving them an incentive to use their celebrity power to stir up trading activity in the Nfts. Needless to say, the Stoner Cats team made huge amounts of money off the project. In September of 2023, the SEC formerly charged Stoner Cats for conducting an unregistered offering of crypto Securities Stoner Cats then offered to settle with the SEC for a $1 million penalty and to stop the Stoner Cats Nfts. They also agreed to set up a fund to reimburse investors in the Nfts who had lost money to decide whether or not Stoner Cats was a scam.

We have to consider what the true intention of the Nft was: Was it truly to Pioneer new way to support independent entertainment that cuts out the middleman like Munis claimed or was it a cash grab to use the crypto hype of 20201 in order to make millions off their fans? Stoner Cats themselves said it was some of both. Owning the Nft is on the one hand, your ticket to watch the Soner Cat series, and on the other hand, an instrument for you to buy and sell on the secondary markets. but how much of it is the first and how much of it is the second? Since each Nft cost $800 at the time of the offering, and given the lowquality nature of the show itself, it's essentially impossible to make the argument that access to the series is the main use case for the Stoner Cats. After the initial offering, the Stoner Cats Nfts traded much like any other crypto, with the price swinging wildly up and down.

The trading volume was so violent in the first few minutes that Ethereum gas fees or the cost of trading Ethereum spiked by 1,000% And that applied to the entire Ethereum network. not just Stoner Cats. That's typical of any Crypto fad. And Stoner Cats Nfts were no except I But not everyone agreed with the Sec's charges against the soner cats.

In a descent, two members of the SEC said that they believe these Nfts shouldn't have been considered any different from a collectible. They said that the offering of the Nfts constitutes fan crowdfunding. Analogously, in the 1970s, when Star Wars was first released, the Toy Company Kenner sold certificates that were redeemable at a future date for Star Wars Action figures. These certificates were bought and sold on secondary markets, supposedly similar to how the Stoner Cats Nfts were bought and sold on secondary markets, but the Stoner Cats and the Star Wars action figures are completely different.

Star Wars was already a cultural phenomenon at the time that action figures were sold, and the Toy Company did not Market them as a way for people to make a profit on their investment. Obviously, there would have been some people who bought them because they thought they would be worth more in the future, but the majority of people bought them because they were already huge Star Wars fans and having the action figures themselves was worth the price. To the extent that anyone traded, bought or sold these action figures with their friends, it would have been because of the value of the action figures themselves. Stoner Cats, on the other hand, were obviously an instrument to enable gambling.

They were clearly marketed towards an adult audience, as evidenced by the adult content and the high prices. When the market prices of Stoner Cats Nfts went down. They then used their Star Power to encourage people to continue buying them on the dip. Buying and selling Stoner Cats inevitably became no different from gambling.

Some people made money, a lot of people lost money, and on every single transaction action, the Stoner Cats team collected their 2.5% royalty fee. The Stoner Cat story just goes to show that they infinite and ever more creative ways for people to extract money off the general public. Whether Milakunis, Vitalic Butterin, or anyone else on the project knew what was really going on, The truth is that the project was just another way to profit from their fan base. Using crypto was just a particularly convenient and opaque way for them to do it.

As fans, we should be careful not to let Star Power or our own personal love of Hol W celebrities. Cloud Our judgment: Whenever someone encourages you to spend a large sum of money on something with the promise of making more money, you should run the other way as fast as you can, even if the person telling you to do it is a household name. All right guys. That wraps it up for this video.

What do you think about Stoner Cats: Do you think Munas thought of the project as a way to make a quick Buck at the expense of her fans? Or was it just an innocent effort to create an Innovative way to fund entertainment projects? Let us know in the comments section: Below On an unrelated note, we're excited to launch the beta version of a new product we've been working on for the past year. Hedge funds and other professional investors often gain an edge by purchasing alternative data sources which can give real-time signals about how companies will perform before they report earnings. But thanks to recent advances and Technology this data no longer needs to be monopolized by hedge funds. For the past 9 months, we've been recording airline ticket price data and using this to predict Airline revenue and profitability before they report earnings.

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In the meantime, thank you so much for watching and we'll see you in the next one! Wall Street Millennial Signing out.