Investors Sue ‘Hawk Tuah’ Memecoin Creators for Securities Law Violations
Investors are taking legal action against the creators and promoters of the “Hawk Tuah” memecoin, inspired by internet sensation Haliey Welch, for alleged securities law violations that led to substantial financial losses. According to a report by Bloomberg Law on December 19, a lawsuit was filed in the US District Court for the Eastern District of New York, naming Tuah The Moon Foundation, overHere Ltd, founder Clinton So, and influencer Alex Larson Schultz as defendants in the case.
The lawsuit claims that the creators of the HAWK token are responsible for a 90% decrease in its value, resulting in investors losing over $151,000. The memecoin gained popularity by capitalizing on Welch’s online presence as the “Hawk Tuah Girl,” with Welch herself assisting in promoting the token through social media and her podcast.
Allegations of Exploitative Marketing and Financial Losses
The HAWK token experienced a rapid rise in market capitalization, reaching $491 million shortly after its launch on December 4, only to plummet to less than $100 million shortly after. The plaintiffs argue that the token’s creators leveraged Welch’s fame to market it as an investment opportunity, misleading investors about the risks involved.
Offshore Entity Controversy
The complaint further alleges that the defendants attempted to establish the Tuah The Moon Foundation as an offshore entity to evade US securities regulations. Despite this, they allegedly failed to prevent US investors from participating in the token sale, indicating a deliberate targeting of the American market.
Celebrity-Endorsed Memecoins and Investor Losses
The collapse of the HAWK token follows a pattern of failed celebrity-backed memecoins this year, including those associated with Andrew Tate, Jason Derulo, and Caitlyn Jenner. All of these tokens exhibited significant supply concentration in a small number of wallets, similar to the HAWK token, leading to substantial financial losses for investors.
In the aftermath of the token’s downfall, Haliey Welch has withdrawn from the public eye, discontinuing her social media activity and podcast. This incident serves as a cautionary tale about the risks associated with celebrity-endorsed cryptocurrencies and the importance of due diligence before investing in such ventures.