$HAWK crypto scandal: Investors sue Hailey Welch over alleged fraud

• Investors sue $HAWK crypto memecoin promoters for alleged unlawful sales and compliance violations.
• $HAWK’s 95% value drop fuels rug-pull accusations and investor outrage.

The controversy surrounding “Hawk Tuah Girl”—Hailey Welch has taken a legal turn. Investors have now filed a lawsuit against individuals and entities linked to the now-collapsed $HAWK memecoin.

The token, which plummeted over 95% in value on its launch day—4th December, has been at the center of allegations of unlawful promotion and sales practices.

A filling against Hailey Welch and partners

In a filing dated 19th December by the Burwick Law firm, investors accused the defendants of violating regulations by offering and selling the token to the public without proper registration. 

The lawsuit alleged that aggressive promotional efforts initially drove up the token’s market value, only to plummet shortly after launch.

 The filing said, 

 “Through aggressive promotional campaigns and promises of future growth, Defendants created a speculative frenzy that caused the Token’s market value to spike shortly after launch, reaching a significant market capitalization.”

It further noted,

“Defendants leveraged Welch’s celebrity status and connections to enhance the Token’s credibility and appeal, including discussing the $HAWK project during Welch’s podcasts featuring notable guests.”  

That being said, the lawsuit identified multiple defendants. This included Tuah The Moon Foundation, accused of managing the proceeds from the token sale, alongside the coin’s creator, OverHere Ltd, and its executive, Clinton So.

Additionally, Alex Larson Schultz, a Los Angeles-based promoter of the memecoin, was named as a key defendant in the case.

Worth noting that $HAWK crypto’s rapid decline, losing 95% of its value from a peak market capitalization of $490 million, has sparked allegations of a rug pull and intensified scrutiny of its legitimacy.

The discovery of linked wallets holding 96% of the token supply, some of which began offloading tokens, further fueled investor outrage.

However, despite these concerns, Welch defended the project, asserting it was “not just a cash grab.”

Her manager, Jonnie Forster, echoed this sentiment, highlighting plans to distribute free tokens to fans as a means of engagement rather than encouraging direct purchases.

Despite the efforts, the token’s collapse has left many questioning the project’s true intentions.

What lies ahead?

Now, as the legal battle unfolds, the defendants, including Welch, will have the chance to respond to the allegations. Needless to say, a motion for summary judgment may follow, potentially leading to a pretrial phase if the motion is denied.

The plaintiffs have sought a jury trial. If granted, it could result in a jury determining damages should the lawsuit succeed.

Regardless of the outcome, the case underscores the risks associated with celebrity-endorsed cryptocurrency projects and raises broader concerns about transparency and accountability in the crypto space.

Remarking on this, Ethereum [ETH] co-founder Vitalik Buterin has also recently criticized celebrity-endorsed memecoins, calling for more meaningful crypto projects.