Investors File Lawsuit Against Hawk Tuah After $HAWK Token Drops 90%
The Hawk Tuah meme coin project faces a lawsuit from investors following a significant decline in the value of its $HAWK token. Bloomberg Law reported that investors allege deceptive practices by the project, which launched the token in early December. The lawsuit claims that promoters executed a "rug pull," resulting in a 90% drop in the token's value and leaving investors with nearly worthless assets.
Insider Trading or Rug Pull?
The $HAWK token was introduced through the Hawk Tuah meme coin project led by Haliey Welch, a public figure with a substantial online presence. Welch promoted the token via her podcasts and social media, attracting fans and novice crypto investors. However, the token’s value fell sharply, causing significant financial losses for many.
The collapse incited community outrage, with allegations of foul play circulating on social media. Crypto investigator Coffeezilla criticized the launch as one of the worst in history, suggesting insider trading linked to accounts tied to the project's creators. Many investors felt misled by the promotional tactics and Welch's involvement, which seemed to provide credibility.
Details of the Lawsuit
Investors have taken legal action against Overhere Ltd, the company behind the token, along with executive Clinton So and promoter Alex Larson Schultz. The lawsuit asserts that the defendants unlawfully sold the $HAWK token to US investors without SEC registration, breaching federal securities laws.
The filing claims the project exploited Welch’s celebrity to generate hype, resulting in a temporary increase in the token's value before its rapid decline. Many plaintiffs were new to cryptocurrency and relied on the project’s roadmap and Welch's endorsements, leading to substantial damages when the token crashed.
Notably, Welch is not included among the defendants in the lawsuit. This situation occurs amidst several high-profile crypto failures, drawing parallels to Logan Paul’s troubled CryptoZoo project, for which he currently faces a lawsuit in the U.S. for misleading investors about his financial interest in the token.