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A dramatic 95% collapse in "Hawk Tuah" memecoin’s value on launch day has left investors reeling and filing a federal lawsuit against its creators. Allegations of fraud, celebrity hype, and token mismanagement dominate the case.
HAWK Memecoin Crash Sparks Legal Battle
The value of HAWK memecoin, a cryptocurrency invented by Hawk Tuah Girl Hailey Welch, dropped by more than 95% on its launch day (December 4), prompting investors to sue various individuals and businesses linked to the coin.
In a filing dated December 19, the attorneys for the investors asserted that the dispute originated from the "unlawful promotion and sale" of the HAWK token. The defendants also broke the law by selling and offering the token to the public before it was registered, according to the lawsuit.
Following the HAWK memecoin's disastrous debut, the Burwick Law company has taken legal action by suing the cryptocurrency's developers in a US federal court on behalf of investors.
Hailey Welch and the Hawk Tuah Viral Fame
When the Solana-based meme coin first launched at the beginning of December, the public face was none other than Hailey Welch, who became famous online earlier this year as the "Hawk Tuah" girl following a video chat on sexual practices that went viral.
Shortly following the debut of HAWK memecoin, things started to go sour. Many said a rug pull caused the price to fall 93% from its peak market capitalization of $490 million. Worse yet, a network of interconnected wallets containing 96% of the total token supply was also discovered. The revelation that some of the wallets had begun selling tokens further complicated the situation and stoked the fires of indignation.
Defendants and Allegations in the HAWK Lawsuit
In addition to the coin's developer, OverHere Ltd., and its executive, Clinton So., the complaint names Tuah The Moon Foundation as defendants, claiming that it controlled the token sale revenues. Another defendant is Alex Larson Schultz, who is headquartered in Los Angeles and promotes the memecoin.
A YouTube video featuring Hailey Welch went popular and catapulted her to stardom. The term "hawk tuah" was used by her to indicate spitting in a sexual sense in the video. She has since launched a clothing line and a podcast, Talk Tuah, capitalizing on her fame on the internet. The program has hosted notable guests such as Mark Cuban, an entrepreneur.
Welch and her associates allegedly promoted the HAWK memecoin extensively using her fame and business platform, according to the lawsuit. The plaintiffs' attorneys claim that the defendants engaged in deceptive advertising that promised rapid expansion.
Speculative Frenzy and Investor Losses
It is believed that these endeavors sparked a speculative frenzy, which in turn drove the token's value to surge rapidly following its launch, eventually reaching a significant market capitalization. It goes on to say that Welch used her podcasts to promote the HAWK project and that she used her celebrity status and connections to boost the token's value.
Memecoins are a type of cryptocurrency that are based on well-known internet jokes or memes but don't really have much use. But there are a plethora of memecoins, and some of them have promising presales. Although she is not named as a defendant in the case, Hailey Welch, better known as "Hawk Tuah Girl," got linked to the HAWK currency. The action was filed in the Eastern District of New York federal court.
Welch’s Role and Controversial Marketing Tactics
The plaintiffs' lawyers claim that Welch's massive online following served solely to boost HAWK memecoin's profile as a revolutionary cryptocurrency. New cryptocurrency investors saw Welch's support and the project's well-defined roadmap as reasons to put their money into the token, Coingape points out. Those investors, however, lost a staggering $440 million in under 20 minutes due to the token's precipitous decline in value.
It was argued by the plaintiffs that the participation and advocacy of Welch was important in drawing in investors. "Welch used social media and made public appearances to shill for FTX." according to the lawsuit, which implies that Welch's marketing tactics took advantage of her celebrity status.
Legal Defense and Project Claims
In an interview with Fortune published on December 4, Welch justified HAWK, saying that it was "not just a cash grab." She explained that going to conferences piqued her interest in cryptocurrency when she saw its potential as a medium to communicate with her audience. Jonnie Forster, her manager, stressed that HAWK memecoin was meant to differentiate itself from the usual celebrity-endorsed cryptocurrency initiatives.
Forster claims that Welch and her group never once suggested that supporters purchase the token. They had instead planned to reward Welch's loyal followers with free tokens whenever they made a purchase or interacted with her online material. According to Forster, Welch has 10% of the HAWK memecoin supply but is legally bound to keep onto it for a year. Regardless of those guarantees, investors are now questioning whether the initiative was just a money grab due to the token's decline.
Future Legal Proceedings and Possible Outcomes
Defendants will have a chance to respond to the complaint and will almost certainly ask the court to grant them summary judgment. The proceedings will proceed with pretrial motions in the event that the judge declines to grant summary judgment. If the plaintiffs' request for a jury trial is granted, the plaintiffs' damages will be determined by a jury in the event of a successful lawsuit.
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