Hawk Toah Investors Sue Meme Coin Promoters, Alleging Securities Violations

December 19, 2024

Investors in Hailey Welch's meme coin Hawk Toah have filed a lawsuit against several of the asset's producers and promoters, accusing the group of securities fraud.

The lawsuit does not name Welch herself as a defendant, and it appears she will not be directly involved in the proceedings.

Hawk Tuah Scam

The launch of HAWK Toah in early December sparked a major scandal in the meme coin space. The HAWK token was launched with great enthusiasm and a market cap of $500 million, but it collapsed after 20 minutes. According to a recent lawsuit, some of the asset’s investors are seeking legal action against the parties responsible.

The lawsuit alleged: “The project was clearly intended to profit from the U.S. market. Despite clear indications of its status as a security, the HAWK token was not registered by Defendants.”

In other words, prosecutors aren’t directly focusing on the sudden withdrawal aspect of the entire scandal. However, the launch of Hawk Toah appears to be a classic example of this scam. Some experts have even suggested that it had a chilling effect on the broader meme coin market.

Instead, they focus on some clearly suspicious features, such as the distribution of the original tokens.

The plaintiffs allege that overHere Ltd., which launched Hawk Toah, “literally stated that token holders would essentially be shareholders” despite this grossly unequal distribution. By alleging that the company violated securities laws, this lawsuit could attack the company on a fruitful line of argument.

Although fraudulent withdrawals have been on the decline in 2024, online fame and meme coin scams can be a powerful combination. For example, YouTuber Mr. Beast recently used his fame to promote volatile assets in an insider trading scheme. Even hacked celebrity accounts can boost fake meme coins.

Meme coins live and die on hype bubbles, and celebrity endorsements can significantly boost fraudulent assets. Hailey Welch herself was not directly named in the lawsuit, and her fortunes may not be affected even if the plaintiffs face severe consequences. Regardless, her credibility among the community will certainly suffer.