The shadowy group behind Haley Welch's meme coin, which crashed hours after its launch, is suing investors for failing to register the cryptocurrency, according to court records filed Thursday. was sued by.
The coin was inspired by Welch, a 22-year-old who shot to internet fame earlier this year after making vulgar comments during a TikTok video. Since then, she has capitalized on her newfound fame with custom products and her podcast, “Talk Tuah.”
The lawsuit alleges that the Cayman Island-based seller and promoter behind the $HAWK token used Mr. Welch's fame to falsely promote the meme coin as a registered security.
Welch enthusiastically announced the memecoin launch on her podcast and to her 2.6 million Instagram followers.
The lawsuit was filed on behalf of the Tua the Moon Foundation in the First District Court for the Eastern District of New York. overHere Ltd and its founder, Clinton So, issued the coin. The defendant is social media influencer Alex Larson Schultz, also known as Doc Hollywood.
Welch is not named in the lawsuit.
The coin reached a market cap of $490 million shortly after its launch on December 4, but within hours it fell more than 90% to less than $100 million.
Plaintiffs' attorneys wrote in the complaint that pre-sales of the coins raised about $2.8 million at a valuation of $16.69 million before the release date.
Investors said they lost more than $151,000.
The day after the coin's tumultuous launch, Soh turned the Tua Foundation into an offshore corporation and sold 17% of the tokens through the foundation to a select group of people to avoid securities laws, according to the complaint.
However, the coin sellers continued to promote the remaining 83% of the tokens and made no “serious attempt” to ensure that the coin buyers were outside the United States, the complaint said.
“This project was clearly intended to exploit the American market,” the complaint says.
Therefore, “we are literally saying that token holders essentially become shareholders,” the plaintiffs said.
However, according to the complaint, the $HAWK token was never registered as a security by the defendants.
“We have been extremely transparent about the scope and limited scope of our involvement in the Hawk Tua Token project,” an overHere spokesperson said. told Bloomberg. “We are confident we have done nothing wrong.”
Despite the coins bearing her “Hawk Tuah” branding, there has been radio silence on Welch's controversy. She hasn't posted on social media or uploaded a new podcast episode since the coin crash.
Welch did not immediately respond to a request for comment.
