Investors Sue Creators of Hawk Tuah Meme Coin for Securities Violations
A recent federal lawsuit has been filed against the creators and promoters of the Hawk Tuah (HAWK) meme coin, alleging that it was an unregistered security and led to significant financial losses for investors. The lawsuit, filed in the U.S. District Court for the Eastern District of New York on Dec. 19, accuses Tuah The Moon Foundation, OverHere Ltd, Clinton So, and Alex Larson Schultz of marketing the token in a misleading way.
According to the 12 American residents who are plaintiffs in the case, they suffered losses totaling over $151,000 after the token’s price collapsed. The HAWK token, which gained traction with the backing of influencer Haliey Welch, launched on Dec. 4 with a market capitalization of about $16.6 million. However, within hours, the market cap surged to $491 million before the price dropped by more than 90%.
This rapid rise and fall raised concerns among investors, with many accusing the creators of engaging in a “pump and dump” scheme. Complaints were filed with the U.S. Securities and Exchange Commission (SEC), calling for an investigation into the token’s launch.
The lawsuit alleges that the defendants portrayed HAWK as more than just a speculative asset, presenting it as a movement with significant growth potential. Welch, also known as the “Hawk Tuah girl,” promoted the token through her social media platforms and podcast, urging her followers to invest. The plaintiffs argue that Welch’s involvement lent credibility to the token, thereby inflating its value.
Despite denying accusations of insider trading and manipulation, Welch faced backlash from investors. She claimed that the token was not a rug pull, and YouTuber Coffeezilla supported this by pointing out that millions of tokens were pre-sold to “strategic advisers” who sold them early. However, anger persisted among investors, especially after it was revealed that 96% of the token’s supply was controlled by a small number of wallets. Some of these wallets sold large quantities of HAWK shortly after the launch, raising suspicions of a coordinated effort to boost the price before selling off the token.
OverHere Ltd, a partner in the project, stated that it did not profit from the venture and was operating under a contract. The company placed blame on Doc Hollywood, a key figure in the project, for mishandling token decisions. In a statement, OverHere called for Welch to address the project’s issues.
The lawsuit also accuses the defendants of attempting to structure the project to circumvent U.S. securities laws by establishing the Tuah The Moon Foundation as an offshore entity. Despite this, the plaintiffs argue that the token’s sale targeted U.S. investors, regardless of efforts to evade legal regulations.
This lawsuit is part of a series of high-profile failures in the celebrity-endorsed crypto space. Other projects linked to individuals like Andrew Tate and Jason Derulo have faced similar allegations of market manipulation and heavy concentration of token supply in a few hands.
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