Hawk Tuah Memecoin Investors Sue Promoters Over Registration (1)

“Hawk Tuah” cryptocurrency sellers and promoters never registered the US-marketed memecoin with the SEC and left investors out to dry during a 90% crash, a lawsuit filed on Thursday said.

The investors said they lost more than $151,000 combined after investing in the cryptocurrency modeled after “Hawk Tuah Girl” Haliey Welch, whose viral phrase kickstarted her social media fame. They’re suing Tuah The Moon Foundation, which collected funds from the $HAWK token; overHere Ltd and its founder Clinton So, which launched the memecoin; and social media influencer Alex Larson Schultz, who promoted it online, in the first US District Court for the Eastern District of New York, alleging the defendants are liable for selling unregistered securities.

Memecoins, which rely on cultural references and online fandoms to gain traction, are accessible and have a low barrier to create, said the investors. Marketing began with Welch—who is not a named defendant—announcing the token on her social media. She promoted it on her channels, podcast, and a pre-sale campaign with free or discounted tokens, they said, raising its appeal.

The defendants allegedly fed on her fame and stirred a frenzy before it officially launched on Dec. 4. A pre-sale raised about $2.8 million at a valuation of $16.69 million, the plaintiffs said. These tokens were immediately tradeable when launched. Within hours, the memecoin’s market value surged to $491 million, but soon plummeted over 90% to below $100 million.

The next day, So said they had been advised by lawyers to make the Tuah Foundation as an off-shore entity and sold an initial allocation of 17% of the tokens through it to a subset of people, the complaint said, to purportedly skirt securities laws. But, the investors said, defendants continued marketing the other 83% of tokens, making “no serious attempt” to restrict purchasers to those outside the US. “The project clearly was intended to take advantage of the American market,” the complaint read.

By So “linking the success of the social media influencer like Welch, he literally said that the Token holders would essentially be shareholders,” the investors said.

“Despite these clear indications of its status as a security, the $HAWK Token was not registered by Defendants,” they said.

“We have been extremely transparent about the limited scope and extent of our involvement in the Hawk Tuah token project. We are confident that we have done nothing wrong,” a spokesperson for overHere said in an email. “As for any litigation, we will let the process play out in court.”

Welch has withdrawn from the public eye since the crypto crash, neither posting on social media nor releasing her podcast in two weeks.

Wolf Popper LLP and Burwick Law PLLC represent the investors.

Attorneys at each firm, Schultz, and Welch’s manager each did not respond to requests for comment.

The case is Albouni et al v. Schultz et al, E.D.N.Y., No. 1:24-cv-08650, complaint filed 12/19/24.