Investors sue Hawk Tuah memecoin creators, promoters over alleged securities law violations
The creators and promoters of the Hawk Tuah memecoin, inspired by Haliey Welch, are facing a lawsuit from investors who allege that the token was an unregistered security and caused significant financial losses after a sharp price collapse, Bloomberg Law reported on Dec. 19.
The lawsuit was filed in the US District Court for the Eastern District of New York and alleges that Tuah The Moon Foundation, overHere Ltd, its founder Clinton So, and influencer Alex Larson Schultz are responsible for a 90% decline in the tokens value, which left investors with more than $151,000 in losses.
The HAWK token capitalized on Welchs internet stardom, which originated from her widely shared Hawk Tuah Girl persona. While Welch is not a defendant, she helped promote the memecoin on social media and her podcast, building buzz through pre-sale campaigns and discounted token offerings.
The pre-sale raised $2.8 million, with the token valued at $16.69 million.
When HAWK launched on Dec. 4, its market cap skyrocketed to $491 million within hours before crashing below $100 million shortly after. The plaintiffs allege that the tokens creators exploited Welchs fame to market the memecoin as a form of investment, equating token ownership with shareholder status.
On-chain data platform Bubblemaps reported that, on launch, the same group of related wallets controlled 96% of HAWKs supply.
Alleged offshore stunt
According to the complaint, the defendants attempted to structure the Tuah The Moon Foundation as an offshore entity to avoid US securities laws. However, they allegedly made no serious effort to restrict the tokens sale to US investors.
The document stated:
The project clearly was intended to take advantage of the American market.
Meanwhile, following the tokens collapse, Welch has stepped away from the public eye, ceasing social media posts and halting her podcast.
The HAWK episode is the latest in a failed celebrity-related memecoin spree this year. Tokens related to Andrew Tate, singer Jason Derulo, and Caitlyn Jenner also resulted in significant losses for their holders, all of which showed heavy supply concentration on a few wallets like the HAWK token.
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Text source: CryptoSlate
