What's New
Investors are suing people associated with a cryptocurrency launched by Hawk Tuah Girl Hailey Welch, following the crash of the memecoin named after her.
It lost more than 95 percent of its value in a single day when it was released on December 4. Lawyers for the investors wrote in their December 19 court filing that the lawsuit "arises from the unlawful promotion and sale of the Hawk Tuah cryptocurrency memecoin, known as the "$HAWK" token (the "Token" or "$HAWK"), which Defendants offered and sold to the public without proper registration."
Named in the suit are: Tuah The Moon Foundation, which was used to handle money taken in from the sale of the meme coin, and the coin's creator, OverHere Ltd and its executive, Clinton So and the meme coin's Los Angeles-based promoter, Alex Larson Schultz.
Newsweek sought email comment on Thursday from Welch; Tuah The Moon and OverHere Ltd.
Why It Matters
Welch rose to fame after she was filmed by YouTube creators using the onomatopoeic phrase "hawk tuah" to describe a spitting action in a sexual context. She has since transformed her newfound fame into a successful merchandise line and a podcast, Talk Tuah, which has featured business people such as Mark Cuban.
The plaintiff attorneys say in their filing: "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. 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."
What To Know
A memecoin is a type of cryptocurrency that is typically launched on the back of a popular internet meme or recurring joke. Welch is not named as a defendant in the case, which was launched in federal court in the eastern district of New York.
Lawyers for the investors also state in their filing: "Defendants leveraged the extensive social media following of Hailey Welch, a prominent social media personality known as the "Hawk Tuah Girl," to market the Token as a groundbreaking cryptocurrency project.
"Many of the investors were first-time cryptocurrency participants drawn to the project through Welch's involvement.
"The rapid decline in the Token's value caused substantial damages to investors who relied on Welch's participation and the project's stated road map."
The plaintiffs are represented by several lawyers from the Wolf Popper law firm and Max Burwick from the Burwick law firm. Newsweek sought comment on Thursday.
What People Are Saying
On December 4, Welch told Fortune that her memecoin, is "not just a cash grab" as its value plunged $440 million in just 20 minutes.
Welch said she had changed her mind about crypto after attending conferences and realized that it was a "good way to interact with my fans."
At the time, her manager, Jonnie Forster, clarified that the HAWK token is distinct from other celebrity crypto ventures, as they are not encouraging people to purchase it.
Instead, they planned to distribute free tokens to social media followers and fans who have purchased her merchandise. Forster mentioned that Welch will own 10 percent of the supply, but she will be unable to sell any of it for a year.
What Happens Next
The defendants will be given an opportunity to replay to the lawsuit and will likely seek a summary judgment in their favor. If the judge does not grant summary judgment, pretrial motions will begin. Plaintiffs are seeking a jury trial and, if granted, a jury would decide damages if the lawsuit is successful.
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