The creators and promoters of the “Hawk Tuah” memecoin, which drew inspiration from the internet stardom of Haliey Welch, are currently facing a lawsuit from investors who claim that the token was an unregistered security and led to substantial financial losses following a sharp decline in its price. Bloomberg Law reported on Dec. 19 that the lawsuit was filed in the US District Court for the Eastern District of New York against Tuah The Moon Foundation, overHere Ltd, founder Clinton So, and influencer Alex Larson Schultz, alleging that they were responsible for a 90% drop in the token’s value, resulting in over $151,000 in losses for investors.
The HAWK token leveraged Welch’s popularity as the “Hawk Tuah Girl” to gain traction in the market. While Welch herself is not a defendant in the lawsuit, she played a significant role in promoting the memecoin on social media and her podcast, generating hype through pre-sale campaigns and discounted token offerings. The pre-sale managed to raise $2.8 million, with the token’s value reaching $16.69 million.
However, when HAWK officially launched on Dec. 4, its market cap surged to $491 million within hours before plummeting below $100 million shortly after. Investors claim that the token’s creators exploited Welch’s fame to market the memecoin as an investment opportunity, falsely equating token ownership with shareholder status. On-chain data platform Bubblemaps revealed that at launch, 96% of HAWK’s supply was controlled by a group of related wallets.
The lawsuit alleges that the defendants attempted to structure the Tuah The Moon Foundation as an offshore entity to evade US securities laws, but failed to enforce restrictions on token sales to US investors. The complaint explicitly stated that the project was designed to target the American market. Following the collapse of the token, Welch has withdrawn from the public eye, refraining from social media posts and podcast episodes.
The downfall of the HAWK token is just one instance in a series of failed celebrity-related memecoin ventures this year. Tokens linked to individuals like Andrew Tate, Jason Derulo, and Caitlyn Jenner also resulted in substantial losses for investors, with all these projects showing high supply concentration in a few wallets, mirroring the situation with the HAWK token. It serves as a cautionary tale about the risks associated with investing in trendy memecoins tied to celebrities.