'The Next Disney' and a Cat Cartoon: The SEC Cases Every Game NFT Designer Should Know

Selling an NFT is not illegal in the United States. Selling an NFT while telling buyers you are "trying to build the next Disney" turned out to be a different matter.

In August and September 2023, the US Securities and Exchange Commission (SEC) settled two cases in which it found that NFT collections were investment contracts, and therefore securities that should have been registered. Neither project was a video game. One was a media company's membership keys, the other a cartoon about cats. But for anyone designing NFTs for a game, the two cases are the clearest public explanation of where the US line sat during the boom years, and of what not to say in a sales pitch.

Case one: Impact Theory's Founder's Keys

On 28 August 2023, the SEC announced settled charges against Impact Theory, LLC, a media and entertainment company based in Los Angeles. Between October and December 2021, it sold three tiers of NFTs called Founder's Keys: "Legendary", "Heroic" and "Relentless". It raised about $30 million from hundreds of investors across the US.

The SEC's order found that the company encouraged buyers to see the purchase as an investment in its business, including by saying it was trying to build "the next Disney". If buyers were buying a share of the company's future success, the NFTs were investment contracts.

The settlement, which Impact Theory accepted without admitting or denying the findings, included:

• a cease-and-desist order;
• more than $6.1 million in disgorgement, interest and a civil penalty;
• a Fair Fund to return money to harmed investors;
• destroying all Founder's Keys in its possession;
• giving up any royalties from future resales of the keys.

Case two: Stoner Cats

Two weeks later, on 13 September 2023, the SEC announced a settlement with Stoner Cats 2 LLC, the company behind the animated web series Stoner Cats. On 27 July 2021, it sold more than 10,000 NFTs at about $800 each. The drop sold out in 35 minutes and raised about $8 million.

The NFTs carried a 2.5 percent royalty on every resale, and buyers went on to spend more than $20 million across at least 10,000 secondary-market trades. The SEC treated the NFTs as unregistered crypto asset securities, applying the same investment-contract test it used for Impact Theory. The company agreed to a $1 million civil penalty, a cease-and-desist order, a Fair Fund and destruction of the NFTs it held.

What game designers should take from it

Neither case said that NFTs are securities. Both turned on how the NFTs were sold. The pattern the SEC described looks like this:

• Promising value growth tied to the company's own work; the "next Disney" pitch is the textbook example.
• Pooling money from many buyers to fund the project.
• Royalties and resale markets that the issuer promoted as part of the deal.

Blockchain games often check at least one of those boxes. A pre-launch sale of land plots or founder NFTs, marketed as early access to an economy that the studio promises to grow, is uncomfortably close. An in-game sword sold for use inside the game, with no promise of profit, is much further away.

How things changed in 2025

These cases now read like a snapshot of a particular era. On 21 January 2025, Acting Chairman Mark Uyeda launched a crypto task force led by Commissioner Hester Peirce, with a mandate to draw "clear regulatory lines", offer "realistic paths to registration", design sensible disclosure and use enforcement resources judiciously. The shift was from case-by-case enforcement toward written rules.

That does not erase the 2023 reasoning. The legal test the SEC used, whether buyers expect profits from the efforts of others, comes from long-standing US case law, and it still applies to anything marketed as an investment.

Why it matters

For game studios selling NFTs to US players, the safest design is still the boring one: sell items for play, not for profit, and keep marketing away from price talk. For players, the cases are a reminder that a promise of an NFT rising in value once a game launches is exactly the kind of pitch regulators read as an investment offer.

WGC's take: The SEC's 2023 cases were not about games, but they are the best plain-language guide to what makes an NFT look like a stock. Korea reached similar questions through a very different route, the game law's prize ban (Korea's approach), and its biggest game-token trial ended on the narrower question of coin versus share (the WEMIX trial).