The plaintiffs allege that they collectively lost about $151,000 after the meme coin’s value tanked post launch. Meanwhile, Craig Wright received a suspended sentence in the UK for contempt of court after defying orders to stop lawsuits based on false claims of being Bitcoin's creator. In Germany, regulators ordered Worldcoin to revise its biometric data practices to comply with GDPR, and in Nigeria, the SEC introduced new stricter rules for crypto marketing. HAWK Meme Coin Faces Legal Trouble The team behind the HAWK meme coin that is associated with Haliey Welch, also known as ”Hawk Tuah Girl,” is facing legal action from investors who allege violations of securities laws. According to court documents that were filed in a District Court of New York on Thursday, the lawsuit claims that HAWK operated as an unregistered security that attracted first-time cryptocurrency investors who subsequently suffered major financial losses after the token's dramatic decline in value. The complaint was brought forward by twelve plaintiffs who collectively reported losses amounting to $151,000. They are seeking a jury trial and believe that HAWK displayed all the hallmarks of an unregistered security. Haliey Welch Central to their argument is the claim that the token's success was intrinsically linked to a ”common enterprise,” driven by the pooling of funds and the efforts of Welch and her team. The plaintiffs argue that the marketing surrounding HAWK created a ”reasonable expectation of profits” and that the token's performance relied heavily on the efforts of Welch and the Tuah Foundation. The lawsuit also alleges that the HAWK token was not registered as a security despite clear indications of its status under existing legal standards. Furthermore, it claims that a wallet controlled by the Tuah Foundation amassed $3 million from transaction fees associated with the token. Haliey Welch rose to viral fame in June of 2024 with her street interview response featuring the phrase ”hawk tuah.” The HAWK token launched on the Solana blockchain through the web3 launchpad platform OverHere on Dec. 4, 2024. The token initially saw a meteoric rise and reached a market cap of approximately $400 million before plummeting by 90%. Craig Wright Sentenced for Contempt in UK Court In other crypto-related legal news, Craig Wright, the Australian national who falsely claimed to be Bitcoin's creator Satoshi Nakamoto, has been handed a one-year suspended sentence in the United Kingdom for contempt of court. The sentence was delivered by Judge James Mellor on Dec. 19, and includes 12 months in jail suspended for two years, alongside a £145,000 fine, equivalent to approximately $180,000. The ruling stems from a case that was started by the Crypto Open Patent Alliance (COPA), which accused Wright of violating a court order issued in July. The order stopped him from filing any further lawsuits against companies based on his unfounded claims of being Satoshi Nakamoto. Wright faced five counts of contempt of court for still continuing to pursue legal actions against Bitcoin developers. The UK court ruled in March that Wright was not the pseudonymous Bitcoin creator, which is a finding Wright later acknowledged on his website in July. COPA attorney Jonathan Hough pointed out that Wright filed lawsuits against more than 100 companies, asking for damages totaling approximately £900 billion. Hough dismissed these lawsuits as “desperate publicity stunts” that are aimed at maintaining Wright's following. Despite appealing the March ruling, Wright's challenge was denied by the UK Court of Appeal due to the fact that his filing contained ”multiple falsehoods.” Wright’s legal battles also prompted counteractions. In July, a UK high court froze his assets to facilitate the recovery of $1.9 million in legal costs owed to podcaster Peter McCormack after a defamation lawsuit. While the Dec. 19 ruling imposes a suspended sentence, it is still unclear if UK authorities will issue an arrest warrant against Wright. Despite claims from various individuals, including Wright, the true identity of the creator of the 2008 Bitcoin white paper is still very much a mystery. German Regulator Takes Action Against Worldcoin The Bavarian State Office for Data Protection Supervision (BayLDA) took corrective action against the digital identity project World, formerly known as Worldcoin, over its handling of biometric data. On Dec. 19, the BayLDA finished its investigation into the project’s compliance with the European Union’s General Data Protection Regulation (GDPR) and ordered World to implement a GDPR-compliant data deletion procedure within one month of the ruling’s effective date. World was launched in July of 2023, and uses iris biometrics for digital identity verification. It has faced some serious scrutiny since its inception. The BayLDA’s investigation started in 2023, and raised concerns over biometric data collection practices. Due to these proceedings, World voluntarily paused its activities in some EU countries. Despite World’s attempts to actually improve its GDPR compliance, the BayLDA identified even more adjustments required. These include the deletion of certain data records collected without a sufficient legal basis during the project’s early stages in 2023 and ensuring explicit user consent for future data processing steps. The BayLDA also shared that issues like the protection of minors and the potential for administrative offenses will be addressed in separate proceedings. In response to the ruling, the World Foundation appealed , and are asking for some judicial clarity on whether its Privacy Enhancing Technologies (PETs) meet the EU’s definition of anonymization. World’s legal team argues that GDPR lacks a consistent definition of anonymization, which is critical when it comes to protecting personal data in the era of artificial intelligence. Despite its appeal, the World Foundation is still committed to working with regulators to establish clear guidelines that balance both privacy protection and technological innovation. Nigerian SEC Tightens Rules on Crypto Marketing Things might become a little tougher legally for crypto projects in other countries as well. The Nigerian Securities and Exchange Commission (SEC) recently introduced updated rules for the cryptocurrency sector, specifically focusing on marketing practices by virtual asset service providers (VASPs) and social media influencers. According to the revised Digital Asset Rules, VASPs must receive prior approval from the SEC before engaging third-party service providers for promotional activities. These service providers are also required to stick to the SEC's marketing regulations. The updated rules apply to any VASP offering services to Nigerian residents, and will take effect on June 30 of 2025. The SEC’s revisions especially target the growing influence of social media personalities, or “Finfluencers,” in promoting crypto products. Influencers have to secure a “no-objection authorization” from the SEC before publishing any advertisements for digital assets. Additionally, they are required to confirm whether the companies they promote are actually licensed by the SEC and disclose any compensation they received for their promotional activities. Non-compliance with these rules could result in penalties, including a fine of at least 10 million naira, which is approximately $6,400, or imprisonment of up to three years. The SEC also announced plans to actively monitor crypto-related advertisements to ensure compliance. These measures are part of the SEC’s attempts to address the increasing popularity of financial influencers and unauthorized promotion of investment products. Currently, only two exchanges are regulated in Nigeria: Quidax Technologies and Busha Digital, both of which received provisional licenses to operate as registered crypto exchanges. The SEC's director-general, Emomotimi Agama, stated that the agency will take decisive action against entities offering crypto services to Nigerians without the proper authorization.
