Investors in the Hawk Tuah meme coin have filed a lawsuit against its creators and promoters, claiming securities fraud after the token’s sudden drop.
The plaintiffs argue that the token was falsely advertised as providing benefits similar to those of shareholders, which violates securities laws. Hailey Welch, who is connected to the project, is not a defendant and will not take part in the legal proceedings.
Hawk Tuah started in early December and quickly became popular in the meme coin market, reaching a market cap of $500 million. However, it dropped sharply in just 20 minutes, causing big losses for investors.
The lawsuit claims that the promoters aimed at the U.S. market without registering the token as a security, breaking regulatory rules. It highlights worries about how the token is distributed and its supposedly misleading setup, instead of just looking at its quick downfall.
The plaintiffs say that overHere Ltd, the company that runs Hawk Tuah, suggested that token holders would have rights similar to shareholders. They say the distribution was unfair and didn’t meet the promises made. The lawsuit focuses on breaking securities law to hold the company responsible using strong legal measures.
Meme coins are being looked at more closely because they rely on excitement and celebrity support, which can sometimes result in scams. Even though rug pulls have decreased in 2024, these tokens are still risky for investors due to their unstable nature.
Famous endorsements can make questionable assets seem more appealing, increasing the risk of scams, such as those involving hacked celebrity accounts.
