Investors have filed a federal lawsuit against the creators and promoters of the “Hawk Tuah” meme coin, accusing them of securities law violations and causing financial losses.
The lawsuit, lodged in the US District Court for the Eastern District of New York, alleges that Tuah The Moon Foundation, OverHere Ltd founder (Clinton So), and influencer (Alex Larson Schultz) were responsible for a massive price collapse that wiped out over 90% of the token’s value. The crash left investors with more than $151,000 in losses, according to Bloomberg Law on Dec. 19.
Hawk Tuah Girl’s Role
Inspired by Haliey Welch’s online persona “Hawk Tuah Girl,” the token initially captured significant attention through social media promotions and a high-profile pre-sale campaign. Though not named as a defendant, Welch contributed to the buzz through her social media platforms and podcasts.
The token’s pre-sale raised $2.8 million, valuing it at $16.69 million before its public launch on Dec. 4. Shortly after launch, the token reached a peak market capitalization of $491 million.
However, within hours, the market cap plummeted below $100 million, erasing most of its value. On-chain analysis from Bubblemaps revealed that, at launch, 96% of the token supply was controlled by a group of interconnected wallets, raising concerns about potential market manipulation.
Hawk Tuah 7-Day Price Chart. | Source: CoinMarketCap
Legal Allegations and Offshore Entity Claims
The complainants alleged that the defendants sought to structure the Tuah The Moon Foundation as an offshore entity to circumvent US securities laws. However, the filing claimed that the Foundation actively marketed the token within and outside the American financial market.
The legal filing further states that the Hawk Tuah token was marketed as an investment opportunity, with creators equating token ownership to shareholder benefits. The creators allegedly exploited Welch’s internet fame to attract unsuspecting investors.
Broader Implications
The token’s collapse adds to celebrity-backed meme coin failures in 2024, including tokens linked to Andrew Tate, Jason Derulo, and Caitlyn Jenner. Notably, these tokens had a heavy concentration of the tokens’ supply in a few wallets.
Meanwhile, Welch’s crypto partners have pointed fingers elsewhere, arguing that Alex Larson Schultz, also known as “Doc Hollywood,” manages a large portion of the token’s distribution. Schultz (a music producer and the son-in-law of comedian Howie Mandel) has not responded to the charges.
Welch has distanced herself from the public following the fallout, halting podcast episodes and ceasing social media updates.