Haliey Welch, known as the "Hawk Tuah Girl," is facing legal challenges following the collapse of her cryptocurrency venture, $HAWK Token.
The memecoin, launched on December 4, 2024, experienced a meteoric rise to a market capitalization of nearly $500 million, only to plummet by over 90% within hours, leaving investors with substantial losses.
Investors have now filed a lawsuit in the U.S. District Court for the Eastern District of New York against the entities behind the token.
Per The New York Post, the defendants include Tuah The Moon Foundation, overHere Ltd., its founder Clinton So, and social media influencer Alex Larson Schultz, also known as Doc Hollywood.
The lawsuit alleges that these parties unlawfully promoted and sold $HAWK Token without proper registration, leading to significant financial harm for investors.
Despite her prominent role in promoting the cryptocurrency to her 2.6 million Instagram followers and podcast audience, Welch is not named as a defendant in the lawsuit.
Since the token's collapse, she has remained silent on the matter, refraining from posting on social media or releasing new podcast episodes.
The lawsuit contends that the defendants used Welch's online fame to market the token, emphasizing community engagement and inclusivity to attract investors.
However, the token's rapid decline has led to accusations of a "pump and dump" scheme, where creators and early investors profit at the expense of later buyers.
One investor reportedly lost $70,000, contributing to total claimed damages exceeding $151,000.
Legal experts suggest that the failure to register $HAWK Token as a security could have serious implications. Yuriy Brisov, a partner at law firm Digital and Analogue Partners, explained that the United States Securities and Exchange Commission (SEC) could launch civil charges for security fraud, alleging misrepresentation or deceit in the sales of securities—if the token qualifies under the Howey test.
The controversy has also sparked discussions about the responsibilities of social media influencers in promoting financial products.
Critics argue that Welch's involvement lent credibility to the project, potentially misleading her followers. In response to the backlash, Welch has not issued any public statements, and her current whereabouts remain unknown.
As the legal proceedings unfold, the case serves as a cautionary tale about the volatile nature of cryptocurrency investments and the potential risks associated with influencer-endorsed financial products.
Investors are advised to conduct thorough research and exercise due diligence before participating in such ventures.