Last Wednesday, viral TikTok sensation Haliey Welch launched a crypto memecoin named for her infamous "Hawk Tuah" catchphrase, touting the token as a way to connect with her fans. The token briefly spiked , climbing to a nearly $500 million market cap. Soon after, to the surprise of no one—other than the unlucky few who decided to buy HAWK on public markets—the coin collapsed more than 95%. The upshot is retail investors got fleeced, while a group of insiders pocketed $3 million, according to blockchain analytics firm Bubblemaps.
The episode has all the markings of a dreaded "rug pull"—crypto slang for a familiar scam where bad actors hype a new project to investors to drive up the price. They then sell off a stash they kept for themselves, leading the value of the new cryptocurrency to plummet. "They've turned this into a one-day pump and dump," Nicolas Vaiman, the founder and CEO of Bubblemaps, told Fortune .
Welch could face civil or even criminal charges for the HAWK scheme, according to one ex-Department of Justice prosecutor, though it's not clear she was in on it. When she spoke with Fortune ahead of the launch, she claimed to be unaware that celebrities like Kim Kardashian and Lindsay Lohan had landed in legal trouble for promoting unregistered coins. Welch's team did not respond to multiple requests for comment, and her lawyer, Christian Barker, could not be reached by phone.
"I think she was used as a marketing stunt by some people who knew what they were doing," Vaiman said. "They managed to fabricate her into a crypto celebrity."
From TikTok sensation to crypto queen
Haliey Welch catapulted into internet fame this summer when a TikTok of her colorful intimacy advice went viral. She managed to parlay the moment into lasting celebrity, including frequent appearances on popular podcasts and a talk show of her own. Welch also began to show up at crypto conferences—an industry, she previously told Fortune , that she viewed as a "scam" that was an "easy way for you to lose money."
Nonetheless, Welch decided to dive headfirst into the volatile sector, teaming up with OverHere, a crypto launchpad for so-called memecoins, which are cryptocurrencies based on internet trends such as Pepe the Frog that sometimes reach market caps in the billions of dollars.
Welch pitched her token as primarily as a reward for her fan base, saying there would be giveaways to podcast listeners and buyers of her merchandise line. Behind the scenes, however, her HAWK partners had other plans. They began reaching out to crypto insiders and promising first dibs before the coin went live.
A popular figure on X named Doc Hollywood shared pitch decks on Telegram, promising investors they would have an early opportunity to unload their tokens, before deleting the messages, according to one person who was approached to join the scheme. Hollywood added that $6.9 million would be sold to early investors at a $34 million valuation, according to a text viewed by Fortune . Doc Hollywood later appeared on an X Spaces with Welch after the disastrous launch but did not respond to multiple requests for comment from Fortune .
Various pitch decks for HAWK viewed by Fortune showed a shifting "tokenomics"—the term for how a cryptocurrency will be distributed. One deck from Nov. 3 called for 20% of HAWK to be reserved for early investors, who would be subject to a one-month lock. When Welch shared an updated version on X last week, however, that figure changed to 17%, with the tokens fully unlocked at launch. (Lockups prevent immediate cash-outs and are intended to help stabilize the price.)
That 17% figure lines up with the analysis conducted by Bubblemaps. According to Vaiman, that portion of the supply was handed out at launch to 285 investors, with nearly half selling the bulk of their holdings immediately, earning a profit of over $3.3 million in the process. More shockingly, only 3% of the supply was released to the public on a decentralized exchange called Meteora. That means that 80% is left undistributed, despite Welch's claims that 20% would be given away at launch to her fans.
Besides the early investors, the team behind the HAWK token also netted around $2 million in fees from Meteora, according to Vaiman, though it is unclear how much went to Welch. Instead, she was set to earn 10% of the token supply after a one-year lockup—a payout that is now virtually worthless. Her lawyer, Barker, told the YouTube sleuth Coffeezilla that Welch was paid $125,000 to promote the token, along with 50% of the net proceeds after expenses. After abruptly leaving an X Spaces after the launch, claiming she had to go to bed, Welch and her usually active social media feeds have gone silent.
Welch's HAWK proceeds may not offset the cost of future legal headaches, however, especially if the Securities and Exchange Commission or the Justice Department file charges. Scott Armstrong, a former prosecutor who handled crypto cases for the DOJ, said that Welch would likely, at a minimum, face lawsuits from followers who bought the token based on her social media representations. "At the worst, she could face a civil or criminal investigation that would examine whether she fraudulently induced her followers to purchase a token that immediately crashed in price," Armstrong said. "The optics are obviously terrible and have the hallmarks of a rug pull."