In a fast evolving yet unregulated crypto world, there have been many incidences of rug pull, especially during the bull cycle where investors show more appetite for investments. Synonymous to “pump and dump,” rug pull occurs in situations whereby a developer markets his or her project before launch and eventually abandons the project, taking all the funds and leaving investors at the receiving end. While there is no doubt that thousands of cryptos enter the market daily, only a few are legitimate. This simply means most of them eventually turn out to be scam. One such project that has been suspected to be a rug pull is Hawk Tuah.
What Is Hawk Tuah?
Developed on Solana around December 2024, Hawk Tuah initially made waves upon launch, hitting a staggering $490 million market cap within hours. The project was allegedly developed by Haliey Welch, a Tennessee native who went viral with her “hawk tuah” catchphrase earlier this year. Welch became popular after using the slang in a response in a YouTube interview. The slang has since became an internet meme, earning hundreds of thousands of followers for Welch.
Welch started her own podcast – Talk Tuah – not long after before eventually venturing into the crypto space. As earlier mentioned, the token exploded immediately after entering the space, recording up to 10x surge. However, within hours of its surge, it suddenly started trading in the red and finally lost more than 95% of its value. The heavy correction in Hawk Tuah heightened speculation about the project being a dump and pump scheme.
The crypto community on social media is currently awashed with posts criticizing Welch for her role in the crash of the project. One of the critics, Stephen Findeison, accused Welch of duping her YouTube followers through the project. Don’t forget that the internet celebrity had on numerous occasions advertised the project through her YouTube podcast, prompting many of her followers to invest in it. In the end, the token’s crash left many of them losing a huge percentage of their initial investments.
Welch denies duping investors
While Welch has denied any wrongdoing, investors are unconvinced, and some of them have even filed a complaint with the SEC. In a recent response to the incident, she insisted that no member of the team sold the tokens they owned. She added that the team tried everything they could “to stop snipers” from manipulating the token’s supply.
More so, she pledged to work assiduously with her team to address growing concerns and stabilize the token. However, the manner in which the project was managed raises questions about the team’s execution and transparency. With more scrutiny in the pipeline due to SEC involvement, the project team could be in for a big trouble.
Risks involved in trading meme coins
Without a doubt, Hawk Tuah’s collapse emphasizes the risk associated with trading meme coins. Unlike cryptos in other market niches, meme coins often lack relevant use cases and only depend on hype. In fact, in most cases, most of their developers are unknown. Some even launch with no roadmap or whitepaper, leaving investors with little or no information about the project. These kinds of projects have higher chances of being a rug pull.
Take $LUIGI, for instance, a meme coin themed around Luigi Mangione, the alleged killer of health insurance executive Brian Thompson. Thompson was murdered in cold blood in Manhattan, New York. The murderer, according to footage, walked close to the deceased before eventually shooting him from the back. Following his arrest, Luigi became the face of meme coins, fueled by social media’s supportive tilt towards him. Tokens like this lack any relevant use cases or roadmap, making them unsustainable. As such, they are more prone to rug pull.
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