Memecoin HAWK creator sued for alleged securities law violations
Investors are suing the creators and promoters of the "Hawk Tuah" memecoin, which was inspired by Haliey Welch. According to court documents, investors have sued the team behind the memecoin HAWK for allegedly violating securities laws.
Investors sue creator of HAWK token
The investors claim that the token was an unregistered security and that it resulted in significant financial losses after a sharp price decline on December 19, according to Bloomberg Law.
HAWK allegedly acted as an unregistered security, attracting newbie cryptocurrency investors who later suffered "substantial damages" as a result of the token's decline, according to the complaint submitted Thursday in a District Court of New York.
Investors experience loss of about $151,000
Twelve plaintiffs who lost funds as a result of their investments in HAWK filed the complaint and asked for a jury trial. Tuah The Moon Foundation, overHere Ltd., its founder Clinton So, and influencer Alex Larson Schultz are accused in the lawsuit, which was filed in the US District Court for the Eastern District of New York, of causing a 90% drop in the token's value, leaving investors with losses exceeding $151,000.
HAWK memecoin acted as an unregistered security
According to the complaint, "the $HAWK Token exhibits all the characteristics of an unregistered security under established legal precedent," recognizing that the token was part of a common enterprise because of "the pooling of funds and the token’s success being tied to the collective efforts of Welch."
Furthermore, the plaintiffs argued that the success of the token depended on Welch and the effort of her project team and that marketing efforts related to HAWK provided a "reasonable expectation of profits."
The complaint goes on to state that "the $HAWK Token was not registered by Defendants despite these clear indications of its status as a security." Furthermore, it asserts that $3 million was collected from token transaction fees in a wallet under the control of the Tuah Foundation.
Haliey Welch faces criticism after HAWK token declines by 90%
Whaleinsider.news earlier reported that the launch of viral influencer Haliey Welch's HAWK memecoin rocked social media. It briefly rose before plummeting after a controversial deployment that included allegations of snipers and insider wallets.
The memecoin was launched on December 4 at 10:00 p.m. UTC and quickly rose to a peak market value of $490 million. The token's price then began to decline, according to DexScreener data, and at the time of publication, it was valued at $41.7 million, a 91% decrease in less than three hours.
In a post to X on December 5, Welch's official account said that the team had not sold any tokens and that no prominent figures had been given free coins. The post went on to say that in order to reduce the risk of sniping, the token was introduced on Meteora, a decentralized liquidity protocol.
Some analysts predicted that Welch and her group might face legal repercussions as a result of the launch, in addition to the controversy surrounding the deployment of the token. The U.S. Securities and Exchange Commission (SEC) has received complaints from several users of X, and law firms have begun marketing their services to those who lost funds on the memecoin.
In a street interview conducted in June 2024, Welch's response—which included the phrase "hawk tuah"—became widely known. On December 4, HAWK was launched on Solana using the web3 launchpad platform OverHere. Following its launch, HAWK's market capitalization soared to $491 million in a matter of hours before plummeting below $100 million.
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