'Hawk Tuah' star Hailey Welch's multi-million dollar memecoin disaster has gone from bad to worse after the dubious group behind the failing cryptocurrency was issued a damning lawsuit Thursday

The coin, referred to as a '$HAWK token,' quickly rose to a whopping $490 million market cap, before ultimately tanking more than 90 percent within hours of its December 4 launch.

Social media star Hailey Welch's memecoin disaster has gone from bad to worse after the group behind the failing cryptocurrency was hit with a damning lawsuit Thursday.

The coin, quickly rose to a $490 million market cap, before ultimately tanking more than 90 percent within hours of its December 4 launch.

Now, the plaintiff's lawyers allege that a pre-sale for the coin had raised approximately $2.8 million, at a valuation of $16.69 million, ahead of the launch date, according to the lawsuit.

Investors are now seeking more than $150,000 in damages.

The Thursday complaint also alleges that the day after the failed launch, Clinton So - who initially launched the coin - made the Tuah Foundation an off-shore entity and sold 17 percent of the tokens through the organization to a subset of people to skirt securities laws.

However, defendants continued marketing the remaining 83 percent of the tokens, making 'no serious attempt' to restrict purchasers outside of the US.

'The project clearly was intended to take advantage of the American market,' the complaint said.

By So 'linking the success of the social media influencer like Welch, he literally said that the Token holders would essentially be shareholders,' the investors said.

'Despite these clear indications of its status as a security, the $HAWK Token was not registered by defendants,' they added.

'We have been extremely transparent about the limited scope and extent of our involvement in the Hawk Tuah token project. We are confident that we have done nothing wrong,' a spokesperson for overHere said in an email.

'As for any litigation, we will let the process play out in court.'

Welch has since faced harsh backlash online as critics accuse the 22-year-old and her team of participating in the 'money-grab' scheme, which she later denied on X.

'Copy and pasting: Hawkanomics: Team hasn't sold one token and not 1 KOL was given 1 free token We tried to stop snipers as best we could through high fee's in the start of launch on @MeteoraAG. Fee's have now been dropped,' she posted.

The failed memecoin was inspired by the internet celebrity who was launched into the spotlight earlier this year following a cheeky comment during a TikTok video that went viral.

She has since made the most of her stardom as she launched a custom merchandise company and a hit podcast, 'Talk Tuah', which has featured comedians like Hannah Berner and Whitney Cummings, pop star JoJo Siwa, and entrepreneur Mark Cuban.