From cointelegraph by Vince Quill

Investors filed a lawsuit against several entities involved in the launch of the Hawk Tuah (HAWK) memecoin on Dec. 19, alleging that the defendants engaged in the promotion and sale of an unregistered securities offering.

According to the legal filing, the defendants named in the lawsuit include the Tuah The Moon Foundation, OverHere Ltd, Clinton So, and Alex Larson Schultz — who allegedly promoted the memecoin. Attorneys for the plaintiffs wrote:

"The pre-launch marketing for HAWK framed the Token as more than a speculative asset, portraying it as a cultural movement with significant growth potential. Welch’s involvement and her reputation as a trusted public figure signaled to her followers and potential investors that the project was poised for success."

The Hawk Tuah memecoin surged to a market capitalization of approximately $491 million hours after its launch but plummeted by more than 90% immediately afterward.

Related: Fame and failure: 7 celebrity-endorsed crypto scams that went wrong

The rise and fall of the Hawk Tuah memecoin

The Hawk Tuah memecoin launched on Dec. 4 with a market capitalization of roughly $16.6 million. The price of the coin surged after launch, and within three hours, the meemcoin’s market cap grew to $491 million. It would then quickly drop to approximately $41.7 million.

This price action drew considerable backlash from investors on social media, who characterized the launch as a classic pump-and-dump scheme after the price of the memecoin collapsed.

Following the collapse of the token, some investors submitted complaints to the Securities and Exchange Commission (SEC) and encouraged others to do the same.

Haliey Welch, the social media influencer who the memecoin was based on, denied allegations of insider trading by her or her team.

Popular YouTuber “Coffeezilla” took to social media to dispel rumors about the HAWK launch. 

The YouTuber argued that the launch of the memecoin was not a rug pull and that her team pre-sold millions of tokens to “strategic advisers,” who offloaded the memecoin early.

Coffeezilla added that the claims of a $500 million rug pull or Welch profiting $50 million from the token launch were also misinformation and overblown allegations.