From a viral sensation to a hotly anticipated meme coin, “Hawk Tuah Girl” is now the subject of a legal battle.
The digital asset developers named after the viral social media meme are now facing a legal battle filed in the US District Court for the Eastern District of New York.
At the center of the legal storm is the “$HAWK” token, which surged in value immediately after its launch and briefly hit a $490 million market valuation Wednesday before dropping 91%, with an updated market cap of $41.7 million.
More than a dozen investors immediately filed the complaint, with Alex Larson Schulz, Overhere Limited, Clinton So, and the Tuah The Moon Foundation as defendants.
$HAWK Started Strong, Then Crashes By 91%
The complaint filed by investors of the Hawk Tuah Girl-inspired meme coin was for violations of the existing federal securities laws.
Haliey Welch, the Tennessee woman who became a viral sensation, inspired the meme coin and was not included in the suit. Welch’s viral video attracted attention and millions of followers on social media.
Her popularity led to her developing podcasts, for which she invited many high-profile guests, including Wiz Khalifa and Mark Cuban.
Welch’s claim to fame was the basis for a cryptocurrency coin, $HAWK, introduced to the market last December 4th, with an initial market cap of $16.69 million.
Hours after its launch, the meme coin breached the $490 million market cap. However, the surge was momentary, as it plunged by 91%, dropping to a market valuation of just $41.7 million the next day.
Total crypto market cap at $3.19 trillion on the 1D chart: TradingView.com
Hawk Tuah: Following The Meme Coin Template
Meme coins have emerged as a popular category within the cryptocurrency sector. They are defined by their connection to viral posts, internet humor, and community engagement.
One reason for meme coins’ popularity is their accessibility, giving retail traders and first-time investors the chance to participate in the community.
According to reports, many of the $HAWK’s investors were first-time crypto buyers inspired by Welch’s viral popularity. The lawsuit pointed out that the steep decline in the token’s market value caused financial damages to investors.
The suit filed in a New York court has produced claims of insider trading and that some developers purposely abandoned the project after raising and gaining from the token’s price.
‘Hawk’ Token An Unregistered Security?
The complainants argued that the token showed the characteristics of an unregistered security based on previous legal decisions and cases.
They added that the project’s developers used Welch’s popularity and social media engagement to market the token and create unique branding.
The complainants further argued the token’s initial success was based on Welch’s entrepreneurial skills and almost zero investor participation.
Meanwhile, market commentators say that the $HAWK’s collapse and allegations of insider trading may undermine current and future crypto projects.
According to George Georgiades of Borderless Innovations Lab Inc., meme coins have raised specific issues that the Securities and Exchange Commission has not addressed in the past.
Featured image from Tayfun Coskun/Anadolu; Kanawatth/Getty Images, chart from TradingView
