Investors Sue HAWK Token Team Over Unregistered Securities

On December 19, a group of investors filed a lawsuit against the team behind the HAWK token, associated with meme figure Hawk Tuah, Hailey Welch. The defendants are accused of selling unregistered securities.

The defendants include Tuah The Moon Foundation, which accepted payments from HAWK buyers, the entity responsible for launching the token overHere, its founder Clinton So, and alleged promoter Alex Larson Schultz.

The plaintiffs claim that the token sale organizers exploited Welch’s fame, who promoted HAWK on her social media, and “sparked a frenzy” ahead of the official launch on December 4. Welch herself is not among the defendants.

Investors stated that during the HAWK presale, the project raised $2.8 million with a valuation of $16.69 million. The coin’s market capitalization surged to $491 million “within hours,” but later plummeted by 90%. They estimate the damage at $151,000.

According to BloombergLaw, lawyers advised the organizers to make Tuah Foundation an offshore company. Through it, 17% of the tokens were sold to a select group, allegedly to circumvent regulations. Subsequently, the project continued to market the remaining assets without “serious attempts” to restrict sales to U.S. residents.

“The project was clearly aimed at exploiting the American market,” the plaintiffs stated.

They emphasized that the connection between the project and Welch’s media success “makes token holders shareholders.”

“We have been completely transparent about our limited involvement in the Hawk Tuah token project. We are confident that we have done nothing wrong. As for any proceedings, we will let the process play out in court,” stated representatives of Clinton So.

According to a post by overHere on X, all decisions regarding the token, fees, and treasury were made by Schultz, known online as Doc Hollywood.

2/ The Facts About Who Did What:

Official Team:
• Doc Hollywood: Controlled all token decisions, fees, treasury
• Halie’s Team: Seeking Web3’s potential without having an experienced Web3 partner to understand its various intricacies

overHere’s Unofficial (Uncontracted)…

— overHere (@overHere_gg) December 16, 2024

“We didn’t even have a contract with the official team. That’s why we took zero fees and made zero profit. So why did we end up doing more? Because [Schultz’s] team disappeared when things got tough,” the developers explained.

At the time of writing, Doc Hollywood’s account on X has been deleted, and Welch has not been publicly active since December 5.

Youtuber Coffeezilla, known for exposing fraudulent schemes, defended the HAWK token sale organizers.

Initially, he released a video analysis of the token sale and expressed his suspicions about the developers’ intentions. However, later the YouTuber posted on X, partially exonerating the organizers.

Can yall stop these insane headlines.
She didn’t rug for 500M and she didn’t profit $50M. FFS.

1. The team presold a few million to “strategic advisors” who sold early.
2. The token got sniped.
3. LP made >$1m on 15% fees according to the meteora tracker. https://t.co/drp6RlGog0

— Coffeezilla (@coffeebreak_YT) December 6, 2024

“Can you stop with these insane headlines? She didn’t conduct a $500M rug pull and didn’t profit $50M,” Coffeezilla stated.

He emphasized that the team sold several million tokens to “strategic investors” during the presale, who rushed to liquidate their shares, and then the token “fell victim to sniper bots.”

“There is plenty to criticize here, and I do, but let’s stick to what we know,” the YouTuber added.

According to his information, Welch’s profit amounts to $125,000, and the destination of the remaining presale and fee funds is unknown.

Earlier in December, a Solana node operator revealed who profits from the meme coin frenzy.