The founders of a cryptocurrency named for a social media personality known as the “Hawk Tuah Girl” face a complaint filed Thursday in a New York federal district court by a dozen investors after the token surged in value before it plummeted, losing more then 90% of its value.
The suit does not name Haliey Welch, the Tennessee woman who rose to prominence last summer after she made an off-color comment in a video that went viral. Her quick-found fame has helped her amass millions of social media followers and launch a podcast that has drawn high-profile guests such as Mark Cuban and Wiz Khalifa.
Her meme moment inspired a crypto coin, $HAWK, that launched on Dec. 4 with a market capitalization of $16.69 million. The value of the coin surged to approximately $491 million before collapsing the same day.
The suit filed in Brooklyn names the coin's founding company, overHERE Ltd.; executive Clinton So; Los Angeles-based promoter Alex Schultz; and the Tuah the Moon Foundation, which was used to manage funds taken in from the sale of the meme coin.
In recent years, meme coins have emerged as a distinctive category within the crypto ecosystem, characterized by their deep-rooted connection to internet culture, humor and community engagement. One of the defining features of meme coins is their accessibility and the relatively low barrier to entry for creation and launch.
"Many of the investors were first-time cryptocurrency participants drawn to the project through Welch’s involvement," the complaint said. "The rapid decline in the token’s value caused substantial damages to investors who relied on Welch’s participation and the project’s stated roadmap."
The collapse of $HAWK token, launched on the Solana blockchain, has led to allegations of insider trading and claims the developers abandoned the project after raising the price of the assets, leaving buyers with worthless tokens. In the complaint, investors allege the token exhibited “all the characteristics of an unregistered security under established legal precedent.”
The complaint alleges the defendants leveraged Welch’s extensive social media following to market the token to “emphasize community engagement, inclusivity, and bridge mainstream culture with the cryptocurrency world.”
It claims the token’s success depended entirely on the “entrepreneurial and managerial efforts of Welch and her project team, with investors playing no active role in the development or adoption.”
Chet Waldman, a partner at Wolf Popper who represents the plaintiffs, did not respond to a request for comment. The defendants did not respond to emails or phone calls. Counsel for the defense has yet to appear.
The collapse of $HAWK and the allegations of misconduct by its founders may undermine the innovation and solutions being developed with blockchain technology and crypto, according to George Georgiades, general counsel at Borderless Innovations Labs Inc., a New York-based stablecoin payments network.
