Investors Sue Hailey Welch’s Team Over HAWK Memecoin Crash

Investors have sued several individuals and entities associated with a cryptocurrency created by Hawk Tuah Girl Hailey Welch, amid a dramatic collapse of over 95% in the HAWK memecoin value on December 4, the same day it launched.

Lawyers for the investors, in a filing dated December 19, claimed the case arose from the “unlawful promotion and sale” of the HAWK token. The filing further mentioned that the defendants sold and offered the token to the public without registration in accordance with the laws and hence, violated such.

HAWK Memecoin Crashes 93%, Investors Sue Creators for Fraud

The Burwick Law firm has filed a US federal lawsuit on behalf of investors against the creators of the HAWK memecoin after its catastrophic failure shortly after its launch.

Hailey Welch, who rose to internet fame earlier this year as the “Hawk Tuah” girl after a viral interview about sexual techniques, was the public face of the Solana-based meme coin when it launched at the start of December.

Burwick Law filed a federal lawsuit on behalf of investors in the HAWK TUAH memecoin, $HAWK.

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— Burwick Law (@BurwickLaw) December 19, 2024

Things quickly went downhill shortly after the HAWK memecoin launch. The price tumbled 93% from a peak market capitalization of $490 million, with many alleging a rug pull. And to make matters worse, a group of linked wallets holding 96% of the token supply was also uncovered. The plot thickened when it emerged that some of the wallets had started selling tokens, inflaming the outrage.

The lawsuit lists several defendants, including Tuah The Moon Foundation, which allegedly controlled the token sale proceeds, and the creator of the coin, OverHere Ltd, and its executive, Clinton So. Alex Larson Schultz, a Los Angeles-based promoter of the memecoin, is also named as a defendant.

Did ‘Hawk Tuah’ Girl Hailey Welch Scam Her Fans?

Hailey Welch first gained internet fame when a YouTube video went viral. In the video she used the phrase “hawk tuah” to describe a spitting action in a sexual context. Since then, she has built a brand on her internet stardom, starting a merchandise line and a podcast, *Talk Tuah*. High-profile guests on the podcast have included entrepreneur Mark Cuban.

The lawsuit claims that Welch and her associates utilized her celebrity and business platform to widely promote the HAWK memecoin. Lawyers for the plaintiffs say the defendants ran aggressive marketing campaigns and promised significant future growth.

These efforts allegedly created a speculative frenzy that caused the token to skyrocket in value shortly after its launch, reaching a notable market capitalization. It also accuses Welch of discussing the HAWK project in her podcasts and using her celebrity status and networks to enhance the token.

A memecoin is a cryptocurrency that’s based on some popular internet meme or joke, and often has very limited practical utility. However, there are plenty of memecoins presales of which, can become lucrative. One such coin, HAWK, became associated with Hailey Welch, a.k.a. “Hawk Tuah Girl,” who is not a defendant in the lawsuit, filed in federal court in the Eastern District of New York.

The attorneys for the plaintiffs cite that Welch’s highly significant social media following was there only to promote HAWK memecoin as a breakthrough crypto project. Many new cryptocurrency investors thought the token was attractive and that it will succeed due to Welch’s backing and the clear road map of the project. However, the dramatic collapse in the token erased $440 million in value within 20 minutes and brought huge losses for those investors.

Hailey Welch Denies Cash Grab

The plaintiffs claimed that Welch’s involvement and promotion was crucial for attracting investors. The suit claims that Welch’s marketing campaigns used her celebrity: “Welch used social media and made public appearances to shill for FTX.”.

On December 4, Welch defended her project, telling *Fortune* that HAWK was “not just a cash grab.” She said her interest in crypto had developed after attending conferences, realizing its potential as a way to engage with her fan base. Her manager, Jonnie Forster, emphasized that the HAWK memecoin was intended to stand apart from typical celebrity-endorsed crypto projects.

According to Forster, Welch and her team did not encourage fans to buy the token. Instead, they wanted to give free tokens to fans who bought Welch’s merchandise or engaged with her online content. Forster also said Welch holds 10% of the HAWK memecoin supply but is contractually unable to sell her share for a year. Despite those assurances, the token’s collapse has investors wondering if the project was a cash grab.

The defendants will be given the opportunity to answer the complaint and are likely to file a motion for summary judgment in their favor. If the judge does not grant summary judgment, the case will continue with pretrial motions. The plaintiffs have requested a jury trial, which, if granted, would mean that a jury would determine damages if the lawsuit is successful.