Featured Image Credit: Michael Tullberg/Getty/HalieyWelchX/Twitter
Topics: Technology, Cryptocurrency
Emma Rosemurgey
Topics: Technology, Cryptocurrency
Hawk Tuah girl-turned-influencer Hailey Welch could face a number of criminal charges after the launch and flop of her own cryptocurrency memecoin HAWK, amid allegations of insider trading.
It comes after fans called for the social media content creator to be jailed after losing their 'life savings.'
Within 20 minutes of its launch, Welch's cryptocurrency market cap tanked from $490 million to just $41 million, prompting claims the influencer orchestrated a rug pull. This is where creators of cryptocurrencies sell all their stock, causing prices to plummet, leaving other investors with virtually nothing.
The influencer has denied the allegations and authorities have not announced any kind of investigation just yet. However, a legal firm has now listed all the potential charges Welch could face if authorities decide to look into the disastrous launch.
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Yuriy Brisov, a partner at law firm Digital and Analogue Partners, explained that the United States Securities and Exchange Commission (SEC) could launch civil charges for security fraud, alleging misrepresentation or deceit in the sales of securities - but only if it qualifies under the Howey test.
Meanwhile, the Department of Justice (DOJ) could also consider criminal charges such as money laundering or wire fraud, if there's any evidence pointing to financial misconduct.
When asked whether he thinks the allegations against Welch would qualify as insider trading, he told Coin Telegraph: "Insider trading traditionally involves trading securities based on material, non-public information, breaching a duty of trust or confidence.
"In the context of cryptocurrencies, the legal framework is still evolving. If Welch’s team possessed non-public information about the token’s launch or had pre-arranged strategies to sell significant portions of the supply, leading to the token’s price collapse, such actions could be scrutinized under fraud or market manipulation statutes."
Taking to X earlier this week, Welch refuted allegations of insider trading on behalf of her team, writing: "Team hasn’t sold one token and not 1 KOL was given 1 free token."
Despite this, data shows more than 80 wallet addresses which had not bought tokens, suggesting they were given tokens prior to the launch. All 80 of these accounts sold their shares for between $10,000 and $365,000 profit.
While no investigations have so far been announced, the US DOJ did recently get involved in a case that saw the founder of the Bitcoin fog crypto mixer sentenced to prison for 12 and a half years.