Investors Sue 'Hawk Tuah Girl' Hailey Welch and Associates Over Cryptocurrency Crash

Investors are suing people associated with a cryptocurrency launched by Hawk Tuah Girl Hailey Welch, following the crash of the memecoin named after her.

Investors have filed a lawsuit against several parties involved in the launch of a cryptocurrency named after "Hawk Tuah Girl" Hailey Welch, following the dramatic crash of the memecoin.

The memecoin, which was named $HAWK, lost over 95 percent of its value in a single day after it was launched on December 4.

Attorneys for the investors wrote in their December 19 court filing that the lawsuit "arises from the unlawful promotion and sale of the Hawk Tuah cryptocurrency memecoin, known as the "$HAWK" token (the "Token" or "$HAWK"), which Defendants offered and sold to the public without proper registration."

The lawsuit names the following defendants: Tuah The Moon Foundation, which was used to handle the money taken in from the sale of the meme coin, and the coin's creator, OverHere Ltd and its executive, Clinton So and the meme coin's Los Angeles-based promoter, Alex Larson Schultz.

Newsweek reached out to Welch, Tuah The Moon and OverHere Ltd for email comment on Thursday.

Welch rose to fame after she was filmed by YouTube creators using the onomatopoeic phrase "hawk tuah" to describe a spitting action in a sexual context. She has since used her newfound fame to launch a successful merchandise line and a podcast, Talk Tuah, which has featured business people such as Mark Cuban.

The plaintiff attorneys write in their filing: "Through aggressive promotional campaigns and promises of future growth, Defendants created a speculative frenzy that caused the Token's market value to spike shortly after launch, reaching a significant market capitalization. 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."

A memecoin is a type of cryptocurrency that is usually launched on the back of a popular internet meme or recurring joke. Welch is not named as a defendant in the case, which was launched in federal court in the eastern district of New York.

Attorneys for the investors also state in their filing: "Defendants leveraged the extensive social media following of Hailey Welch, a prominent social media personality known as the "Hawk Tuah Girl," to market the Token as a groundbreaking cryptocurrency project.

"Many of the investors were first-time cryptocurrency participants drawn to the project through Welch's involvement.

"The rapid decline in the Token's value caused substantial damages to investors who relied on Welch's participation and the project's stated road map."

The plaintiffs are represented by several attorneys from the Wolf Popper law firm and Max Burwick from the Burwick law firm. Newsweek reached out to them on Thursday for comment.

On December 4, Welch told Fortune that her memecoin, is "not just a cash grab" as its value crashed by $440 million in just 20 minutes.

Welch said she had changed her mind about crypto after attending conferences and realized that it was a "good way to interact with my fans."

At the time, her manager, Jonnie Forster, clarified that the HAWK token is distinct from other celebrity crypto ventures, as they are not encouraging people to purchase it.

Instead, they planned to distribute free tokens to social media followers and fans who have purchased her merchandise. Forster mentioned that Welch will own 10 percent of the supply, but she will be unable to sell any of it for a year.

The defendants will be given an opportunity to replay to the lawsuit and will likely seek a summary judgment in their favor. If the judge does not grant summary judgment, pretrial motions will begin. Plaintiffs are seeking a jury trial and, if granted, a jury would decide damages if the lawsuit is successful.