‘Hawk Tuah' girl’s cryptocurrency crashes shortly after launch: What are meme coins?

What happened with Haliey Welch’s $HAWK cryptocurrency launch?

LOS ANGELES - Haliey Welch, known for her viral "Hawk Tuah" TikTok video, launched her own cryptocurrency, $HAWK, on the Solana blockchain. However, the memecoin’s value plummeted by 95% shortly after its release.

Initially hitting a market capitalization of $500 million, $HAWK quickly dropped to $25 million, resulting in significant financial losses for investors. The controversy escalated when some investors accused Welch and her team of insider trading and filed complaints with the Securities and Exchange Commission (SEC).

In response, Welch denied any wrongdoing, stating on social media that her team "tried to stop snipers as best we could" and had not sold any tokens.

What are memecoins, and why are they so risky?

Memecoins are cryptocurrencies inspired by internet memes or trends. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, memecoins often lack intrinsic utility, relying on community enthusiasm and viral appeal.

According to Coinbase, memecoins like Dogecoin and Shiba Inu are purely speculative trading instruments, frequently associated with high volatility and risk. Their value often fluctuates based on hype or endorsements rather than tangible use cases.

Why did $HAWK face backlash?

The $HAWK coin’s disastrous launch has drawn criticism from the crypto community, with accusations of poor planning and potential foul play. According to a report from Rolling Stone, some investors have already filed complaints with the Securities and Exchange Commission (SEC), alleging that the project may have been a "rug pull."

Haliey Welch appears at SiriusXM Studios on July 31, 2024 in Los Angeles, California.

A rug pull occurs when developers inflate the hype around a cryptocurrency project to attract investors and drive up its value. Once the project gains momentum, developers sell their holdings for a profit, causing the coin’s value to collapse and leaving other investors with significant losses.

Welch and her team have denied these allegations, asserting on social media that they did not sell any tokens and worked to minimize the impact of sniper bots that manipulated the coin’s supply. However, the abrupt value drop and lack of safeguards have led many to question the project’s execution and transparency.

What’s next for $HAWK and Welch?

Welch’s team has pledged to address concerns and stabilize the coin’s value. However, the SEC complaints and allegations of a "rug pull" could lead to legal scrutiny. As memecoins continue to attract traders with the promise of high returns, experts urge caution, emphasizing the importance of research and understanding the risks before investing.