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

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

According to the plaintiffs, the organizers exploited Welch’s popularity, who promoted HAWK on her social media, to generate hype before the token’s official launch on December 4. Welch herself is not listed as a defendant.

The investors claim that during the HAWK presale, the project raised $2.8 million with a valuation of $16.69 million. The token’s market capitalization surged to $491 million “within hours,” only to collapse by 90% later. Estimated losses are around $151,000.

Bloomberg Law reported that legal advisors suggested establishing Tuah Foundation as an offshore company. Seventeen percent of the tokens were allegedly sold privately to bypass U.S. regulations. Afterward, the project continued promoting the remaining tokens without “serious attempts” to restrict sales to U.S. residents.

“The project was clearly targeting the American market,” the plaintiffs stated, emphasizing that the connection between the project and Welch’s media presence makes token holders akin to shareholders.

“We were completely transparent about our limited involvement in the Hawk Tuah token project. We are confident we did nothing wrong. Regarding any legal proceedings, we will let the process unfold in court,” Clinton So’s representatives said.

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
• Haliey'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 earned zero profit. So why did we end up doing more? Because Schultz’s team disappeared when things got tough,” the developers explained.

As of now, Doc Hollywood’s account on X has been deleted, and Welch has been inactive on social media since December 5.

YouTuber Coffeezilla, known for exposing scams, defended the HAWK token team. Initially, he released a video dissecting the token sale and voiced suspicions about the developers’ intentions. However, he later 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 we stop with these crazy headlines? She didn’t rug pull $500 million or make $50 million,” Coffeezilla said.

He clarified that the team sold several million tokens to “strategic investors” during the presale, who rushed to liquidate their holdings, causing the token to “fall victim to sniper bots.”