The murky group behind “Hawk Tuah” girl Haliey Welch’s meme coin — which crashed hours after its launch — was sued by investors for failing to register the cryptocurrency, according to court records filed Thursday.
The coin was inspired by Welch, 22, who shot to internet fame earlier this year after making a raunchy comment during TikTok video that went viral. She has since capitalized on her newfound fame with custom merchandise and a podcast, “Talk Tuah.”
The lawsuit, alleges that the Cayman Island-based sellers, as well as the promoters, behind the “$HAWK Token” used Welch’s fame to falsely promote the meme coin as a registered security.
Welch had eagerly plugged the meme coin’s launch on her podcast and to her 2.6 million Instagram followers.
The suit, filed in the first US District Court for the Eastern District of New York, named Tuah The Moon Foundation; overHere Ltd and its founder Clinton So, which launched the coin; and social media influencer Alex Larson Schultz, also known as Doc Hollywood, as defendants.
Welch was not named in the lawsuit.
The coin hit a $490 million market cap shortly after its launch on Dec. 4 – but tanked more than 90% to less than $100 million within hours.
A pre-sale for the coin had raised approximately $2.8 million at a valuation of $16.69 million ahead of the launch date, the plaintiffs’ lawyers wrote in the suit.
The investors said they lost more than $151,000.
The day after the coin’s turbulent launch, So made the Tuah Foundation an off-shore entity and sold 17% of the tokens through the foundation to a group of people to escape securities laws, according to the complaint.
But the sellers behind the coin continued promoting the remaining 83% of the tokens and made “no serious attempt” to ensure those purchasing the coins were outside the US, the suit said.
“The project clearly was intended to take advantage of the American market,” the complaint said.
So “literally said that the Token holders would essentially be shareholders,” the plaintiffs said.
But the $HAWK token was never registered as a security by the defendants, according to the suit.
“We have been extremely transparent about the limited scope and extent of our involvement in the Hawk Tuah token project,” an overHere spokesperson told Bloomberg. “We are confident that we have done nothing wrong.”
Despite the coin bearing her “Hawk Tuah” brand, there has been radio silence on the controversy from Welch. She has not posted on her social media or uploaded a new podcast episode since the coin crashed.
Welch did not immediately respond to a request for comment.