A 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.
A 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. 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 way that misled investors. The plaintiffs, 12 American residents, claim that they suffered losses totaling over $151,000 after the token’s price collapsed.
The HAWK token, which was backed by influencer Haliey Welch, launched on Dec. 4 with a market capitalization of about $16.6 million. Within hours, the market cap surged to $491 million, but the price then plummeted by more than 90%. This dramatic rise and fall led many investors to accuse the creators of a "pump and dump" scheme. Complaints were lodged with the U.S. Securities and Exchange Commission (SEC), urging the agency to investigate the token’s launch.
The lawsuit alleges that the defendants marketed HAWK as more than just a speculative asset, portraying it as a movement with significant growth potential. Welch, who became known as the "Hawk Tuah girl," promoted the token through her social media and podcast, encouraging followers to invest. The plaintiffs claim that Welch’s involvement gave the token an air of credibility, which in turn inflated its value.
Despite the backlash, Welch, who is not named in the lawsuit, has denied accusations of insider trading and manipulation. She claimed that the token was not a rug pull, and YouTuber Coffeezilla backed this up, stating that millions of tokens were pre-sold to “strategic advisers” who sold them early. However, there was widespread anger from 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, further fueling suspicions of a coordinated effort to inflate the price before dumping the token.
OverHere Ltd, which partnered with the project, claimed it made no profit and was working under a contract. The company’s representatives blamed Doc Hollywood, a key figure in the project, for not handling token decisions properly. In a statement, OverHere said that it was time for Welch to address the issues surrounding the project.
The lawsuit also accuses the defendants of attempting to structure the project to avoid U.S. securities laws by setting up the Tuah The Moon Foundation as an offshore entity. The plaintiffs argue that the token’s sale was aimed directly at U.S. investors, despite the attempt to avoid legal regulations. This lawsuit adds to a series of high-profile failures in the celebrity-endorsed crypto space, where other projects, such as those linked to Andrew Tate and Jason Derulo, faced similar accusations of market manipulation and heavy concentration of token supply in a few hands.
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