Haliey Welch’s Potential charges in SEC Investigation of HAWK launch

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As a seasoned researcher with years of experience delving into the complex world of finance and cryptocurrencies, I find myself intrigued by the unfolding events surrounding Hailey Welch’s HAWK memecoin launch. The allegations of insider trading, fee extortion, and manipulation are not unheard of in this rapidly evolving market, but the sheer scale of the collapse in value raises some eyebrows.

The launch of Haliey Welch’s HAWK memecoin might face examination over potential insider trading, and it’s possible that the Securities and Exchange Commission may file civil suits for alleged fraudulent activities.

As a crypto investor, I find myself concerned about recent developments surrounding Welch’s project. Though she maintains her innocence and there’s no formal investigation ongoing yet, I can’t help but wonder if the US Securities and Exchange Commission (SEC) or the Department of Justice (DOJ) might decide to look into the launch. If that happens, it could lead to some serious legal repercussions for Welch and her team.

Almost immediately after its launch on December 4th, the value of HAWK plummeted by about 90%. This drop brought its peak valuation down from approximately $490 million to around $30 million, which led to a great deal of criticism.

Yuriy Brisov, a partner at Digital and Analogue Partners law firm, stated that if HAWK is categorized as a security according to the Howey Test, the Securities and Exchange Commission (SEC) might bring civil charges for securities fraud. In simpler terms, he noted that insider trading typically involves buying or selling securities using confidential, non-public information, which violates trust or confidence obligations.

Furthermore, the Department of Justice (DOJ) might file criminal accusations like wire fraud or money laundering should there be proof of intentional financial wrongdoing or deceit.

Claims of illegal stock trading due to tight control by a few accounts, excessive fee collection, and manipulative buying have caused problems during the launch.

Brisov noted that in the rapidly changing laws surrounding cryptocurrencies, holding secret information about a token’s launch or premeditated plans to sell large amounts of the supply might attract investigation under fraud or market manipulation laws, especially if such actions caused the token’s value to plummet.

Information from Dexscreener and Solana’s blockchain explorer Solscan showed that around 80 wallets had already acquired tokens prior to the project’s launch. These early wallet holders reportedly made profits ranging from $10,000 to a staggering $365,000.

Welch refutes these allegations by asserting, on the platform previously known as Twitter, that neither she nor her team engaged in selling tokens or providing them for free to influencers (Key Opinion Leaders – KOLs). She explained that high transaction fees were intentionally set at launch as a means to discourage quick reselling or “sniping”.

In simpler terms, Joni Pirovich, a lawyer specializing in crypto law, pointed out that if it’s proven someone engaged in insider trading, the consequences could become even more severe due to the additional charge of deceiving the public. Essentially, using insider information for profit is already a significant legal matter, but intentionally misleading the public about it adds an extra layer of accountability.

The responsibility for launching a meme coin hinges on its classification by the Securities and Exchange Commission (SEC). Under the guidance of Gary Gensler, many tokens are categorized as securities, necessitating registration. Nevertheless, the regulatory standing of meme coins is yet to be defined.

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2024-12-06 23:33