Investors have recently filed a lawsuit against the promoters of the "Hawk Tuah" memecoin, alleging significant financial losses after the cryptocurrency experienced staggering volatility shortly after its launch. The case, filed on December 19, 2024, at the U.S. District Court for the Eastern District of New York, points fingers at several firms and individuals involved with the $HAWK token, which had initially spiked to nearly $491 million before plummeting by over 90%.
The plaintiffs allege they collectively lost more than $151,000 when the memecoin—a product of social media influencer Haliey Welch’s internet fame—crashed dramatically within hours of hitting the market on December 4. They are suing the Tuah The Moon Foundation, which managed the token's finances, its founding company OverHere Ltd., its creator Clinton So, and lead promoter Alex Larson Schultz, claiming these parties sold unregistered securities.
Under these laws, any investment offered to the public must be registered with the Securities and Exchange Commission (SEC). The lawsuit highlights the marketing strategy driven by Welch, known for her viral "Hawk Tuah Girl" persona, emphasizing how her promotion led to widespread investor participation, especially among newcomers to the cryptocurrency scene.
According to the complaint, the project amassed $2.8 million during pre-sale events, banking on hype generated by Welch’s online following. This frenzy left many first-time investors drawn to the allure of easy gains. "Many investors were first-time cryptocurrency participants drawn to the project through Welch’s involvement," the lawsuit asserts, reflecting the interplay between celebrity endorsements and riskier investment behaviors.
Shortly after its launch, the token’s value surged, creating buzz around its potential but soon tanked. Within hours, the once-promising memecoin dropped from its peak valuation to under $100 million. The complaint points out alarming actions taken by the defendants to circumvent securities laws, noting they intended to use the token's popularity for personal profit at the expense of unsuspecting investors.
"The project clearly was intended to take advantage of the American market," the plaintiffs stated, emphasizing the global appeal of cryptocurrencies and how easy it is for individuals to overspend on speculative assets. Following the demise of the $HAWK token, So reportedly announced they had been advised by counsel to create the Tuah Foundation as part of their strategy.
Many are calling the $HAWK debacle emblematic of rampant scams within the crypto sphere, leading to renewed discussions on the responsibilities of promoters and the necessity for investor protections. Welch, who branded the token with her social media presence, has retreated from public view following the crash, failing to comment on the legal developments. Her absence has incited speculation about her knowledge and potential liability concerning the alleged rug-pull.
Investors took to social media expressing anger and frustration, with some claiming they lost their life savings. Notably, critics have also lambasted Welch’s profiting from the marketing campaign without directly holding her accountable for the financial fallout.
Despite her exclusion from the lawsuit, doubts linger over Welch's ethical stance, especially concerning the influence she wielded over her followers. "Copy and pasting: Hawkanomics: Team hasn't sold one token and not 1 KOL was giver 1 free token," she posted online, attempting to redefine her position following accusations of negligence.
This case serves as a cautionary tale for investors, with both crypto veterans and newcomers urged to conduct comprehensive research before pouring money (often they can't afford to lose) onto the speculative grounds of cryptocurrencies. The legal process is expected to unearth more facts, shedding light on the murky dealings of crypto promotions and partnerships.
The lawsuit’s ramifications could extend beyond financial recovery for the aggrieved investors, potentially reshaping the intersection of influencer marketing and regulatory frameworks governing cryptocurrency. With heightened skepticism surrounding the memecoin market, the fallout from Hawk Tuah has prompted discussions about the future of celebrity endorsements within the risky cryptocurrency space.
