Known as the Hawk Tuah Girl, Hailey Welch launched her memecoin, $HAWK, on the Solana blockchain on December 4. What started as an explosive debut, with the token reaching a market cap of nearly $500 million, quickly turned into a dramatic crash, plunging below $60 million in a matter of hours.

The Meteoric Rise

At precisely 10:00 pm UTC on December 4, the $HAWK token made its debut, immediately captivating the attention of investors and crypto enthusiasts alike. Within minutes of launch, the memecoin surged to an astonishing $490 million market cap. The sudden rise was driven by massive buy-ins and growing interest in Welch’s celebrity-backed project.

However, the initial surge did not last. As quickly as the token had risen, it started its sharp descent, falling 91% in less than three hours. By the time of publication, $HAWK was trading at $0.004906 with a market cap of $49 million, according to Dexscreener.

The Controversy Behind the Crash

The rapid volatility of $HAWK has sparked controversy, with allegations of insider trading and sniping at the heart of the debacle. In cryptocurrency, sniping refers to the practice of bots or early investors purchasing large amounts of tokens at launch, thereby controlling the majority of the supply. According to data from Bubblemaps, insiders and snipers owned a staggering 80%-90% of $HAWK’s supply during its early moments, raising questions about the fairness of the token's distribution.

Welch, however, denied any involvement in such activities. In a statement to Fortune, she insisted that neither she nor her team had sold any tokens. “

Team hasn’t sold one token and not 1 KOL [key opinion leader] was given 1 free token,” Welch asserted. 

She also noted that the team had taken precautions to prevent sniping, such as implementing high fees during the launch phase. Despite these measures, data from Solana block explorer Solscanner revealed that a single wallet had acquired a significant portion—17.5%—of $HAWK’s supply for almost $1 million, only to later sell those tokens for a $1.3 million profit.

Legal and Ethical Questions Arise

The surge and subsequent crash of $HAWK have ignited legal concerns, with users and investors voicing their frustrations over the lack of transparency and fairness. In a post on X (formerly Twitter), some users claimed to have filed complaints with the SEC, questioning the legality of the token’s launch and distribution. Law firms have even begun advertising their services to individuals who lost money in the chaotic aftermath.

This controversy brings to mind the history of celebrities and crypto. Figures like Kim Kardashian and Floyd Mayweather have faced fines and legal scrutiny for promoting tokens without disclosing compensation. 

When asked about these incidents, Welch claimed she wasn’t aware of the SEC’s actions against celebrities in the space, emphasizing that her approach was different, in an interview with Fortune. According to Welch’s manager, Jonnie Forster, the HAWK token was not intended to be a cash grab but rather an effort to connect with Welch’s fanbase. 

“We don’t want to break securities laws,” Forster said. “We would say that we’re almost, like, tokenizing, in a sense, Haliey’s fan base.”

According to her manager, the plan is to give free tokens to her social media followers and fans who purchase her merchandise, while Welch herself will retain 10% of the token supply, with restrictions on selling for a year.

While her initial ventures into crypto, such as attending blockchain events and conferences, raised eyebrows, Welch insists that her approach is genuine. She revealed that it was rapper Lil Pump who introduced her to the world of cryptocurrencies, and she’s now determined to change the public’s perception of crypto as merely a “scam.”

However, the lack of clarity about the token’s future utility has left many questioning its long-term viability.