“Hawk Tuah Girl” Controversy Takes a Legal Turn as Investors File Lawsuit Against Hailey Welch and Partners

The token, which plummeted over 95% in value on its launch day—4th December, has been at the center of allegations of unlawful promotion and sales practices.

Investors in the now-collapsed memecoin $HAWK have filed a lawsuit against several individuals and entities linked to the crypto project in a Florida federal court.

The defendants include TikTok star Hailey Welch (“Hawk Tuah Girl”), who promoted the token, and several crypto firms.

The lawsuit, filed on Monday, alleges that the defendants violated securities laws by offering and selling the token to the public without registering it with the SEC.

The complaint further alleges that the defendants engaged in fraud by making false and misleading statements about the token and its potential value.

According to the filing, Welch and her partners engaged in aggressive promotional efforts that initially drove up the token's market value, only for it to plummet shortly after launch.

The filing states that the defendants "created a speculative frenzy that caused the Token's market value to spike shortly after launch, reaching a significant market capitalization."

It adds that the defendants "leveraged Welch's celebrity status and connections to enhance the Token's credibility and appeal, including discussing the $HAWK project during Welch's podcasts featuring notable guests."

The lawsuit also names several other defendants, including the Tuah The Moon Foundation, which is alleged to have managed the proceeds from the token sale.

The coin's creator, OverHere Ltd, and its executive, Clinton So, are also named as defendants.

Moreover, Alex Larson Schultz, a Los Angeles-based promoter of the memecoin, is named as a key defendant in the case.

The rapid decline of the token, which lost 95% of its value from a peak market capitalization of $490 million, has sparked allegations of a rug pull and brought the legitimacy of the project under close examination.

Upon discovering wallets linked to the project that together held 96% of the token supply, with some beginning to sell off tokens, investors expressed outrage.

However, Welch defended the project, stating that it was "not just a cash grab." Her manager, Jonnie Forster, also maintained that they had planned to give away free tokens to fans as a way to engage with them, rather than encouraging direct purchases.

Despite their efforts, the token's collapse has left many questioning the true intentions behind the project.

As the legal battle unfolds, the defendants, including Welch, will now have a chance to respond to the allegations.

A motion for summary judgment is likely to follow, and if denied, the case will proceed to a pretrial phase.

The plaintiffs have requested a jury trial, which, if granted, would involve a jury determining damages in the event the lawsuit is successful.

The case highlights the risks involved in celebrity-endorsed cryptocurrency projects and raises broader concerns about transparency and accountability in the crypto space.

On a related note, Ethereum [ETH] co-founder Vitalik Buterin recently slammed celebrity-backed memecoins, calling for more substantial crypto projects.