From Fame to Fines: When Celebrities Cross the Line in Crypto Promotions
Katin Perez
Hailey Welch, host of podcast “Talk Tuah,” recently found herself in the middle of a legal crisis after launching her own cryptocurrency, "HAWK."[1] HAWK debuted on December 4, 2024, rising to a $500 million market cap within hours before plummeting to $60 million shortly after.[2] The unexpected downfall of HAWK caused outrage, prompting speculation among investors of a potential “pump and dump” scheme.[3] A “pump and dump” scheme is when promoters boost the price of a cryptocurrency through false or misleading statements, leading to the promoters quickly dumping the asset at the inflated price, causing the cryptocurrency to plummet in price as investors lose confidence in its viability.[4] Some pointed to insider wallets and crypto snipers, insider traders who exploit market inefficiencies by buying cryptocurrencies at launch then quickly selling the security at its peak price, as the culprits behind the crash.[5] However, Welch firmly denied any wrongdoing, asserting that no one from her team sold any of their holdings.[6] Despite the chaos, Welch’s crypto journey ended happier than most. The Securities and Exchange Commission (“SEC”) investigated the incident but ultimately closed the case without filing charges or seeking financial penalties.[7]
This happy ending is a rare outcome in the celebrity-crypto world. Over the past few years, several celebrities have faced serious repercussions for their roles in promoting cryptocurrencies.[8] In 2022, Kim Kardashian paid a $1.26 million settlement after failing to disclose a $250,000 payment for promoting EMAX tokens.[9] In 2023, celebrities like Lindsay Lohan, Jake Paul, and Ne-Yo agreed to collectively pay over $400,000 in a similar case involving Tronix and BitTorrent tokens, where the celebrities were also charged with failing to disclose payments for promoting such cryptocurrencies.[10] Two additional celebrities: Austin Mahone and Soulja Boy fought back in court regarding the allegations of wrongly promoting Tronix and BitTorrent tokens, only to eventually lose and face additional fines for non-disclosure.[11]
At the center of these cases is § 77q(b) of the Securities Act of 1933, which makes it illegal to promote securities without fully revealing any compensation received.[12] Additionally, § 78j(b) and regulation § 240.10b-5 provide further protections by banning any manipulative or deceptive practices in connection with buying or selling securities, including classic “pump and dump” schemes of hyping a cryptocurrencies value utilizing misleading celebrity promotions and then dumping such cryptocurrencies for a profit shortly after.[13] The SEC’s enforcement actions of these laws and regulations aim to increase investor trust and maintain a fair, transparent marketplace.[14] However, that is not an easy task in the mostly unregulated world of cryptocurrencies, where fraud and scams have eroded public confidence. A 2024 Pew Institute poll found that 63% of Americans do not trust the cryptocurrency's reliability or safety.[15]
To restore faith in the system, lawmakers are pushing for stronger disclosure and transparency rules.[16] In a recent letter, Senator Sherrod Brown (D-OH) highlighted that inadequate disclosures around cryptocurrencies benefit industry insiders by keeping consumers uninformed.[17] He noted that this opacity has led to scams, insider manipulation, and hacks, resulting in nearly $10 billion lost to crypto scams or stolen in hacks in 2022.[18] Congress must continue to create legislation to improve cryptocurrencies transparency and stability, with the goal of ensuring everyday investors avoid falling prey to misleading endorsements or sketchy pump and dump schemes. However, in the meantime, if the crypto industry hopes to survive and thrive, it must embrace the SEC’s enforcement of tighter regulations and accountability measures. The SEC can continue to protect investors and increase confidence in cryptocurrencies by enforcing securities laws that prevent fraud, ensuring that the SEC’s mission of markets operating transparently and fairly is met.[19] For now, the SEC remains pivotal in ensuring consumer confidence increases in cryptocurrencies to help foster the growth of cypto markets.
[1] Meredith Clark, Sell that thang: Hawk Tuah girl faces ‘pump and dump’ allegations as crypto coin collapses hours after launch, independent (Dec. 5, 2024), https://finance.yahoo.com/news/sell-thang-hawk-tuah-girl-174526518.html.
[2] Id.
[3] Id.
[4] Pump and Dump Schemes, glancy, prongay, & murray (last visited Apr. 12, 2025), https://www.glancylaw.com/practices/securities/common-types-of-securities-fraud/pump-and-dump-schemes/.
[5] Meredith Clark, Sell that thang: Hawk Tuah girl faces ‘pump and dump’ allegations as crypto coin collapses hours after launch, independent (Dec. 5, 2024), https://finance.yahoo.com/news/sell-thang-hawk-tuah-girl-174526518.html.
[6] Id.
[7] HAWK TUAH’ GIRL OFF THE HOOK FOR HAWKING MEME COIN!!!, TMZ (Mar. 27, 2025, 3:19 PM), https://www.tmz.com/2025/03/27/haliey-welch-hawk-tuah-girl-meme-coin-investigation-over-sec-no-charges/
[8] Press Release, U.S. Sec. and Exch. Comm’n, SEC Charges Crypto Entrepreneur Justin Sun and His Companies for Fraud and Other Securities Law Violations, (Mar. 22, 2023), https://www.sec.gov/newsroom/press-releases/2023-59.
[9] Press Release, U.S. Sec. and Exch. Comm’n, SEC Charges Kim Kardashian For Unlawfully Touting Crypto Security (Oct. 3, 2025), https://www.sec.gov/newsroom/press-releases/2022-183.
[10] Press Release, U.S. Sec. and Exch. Comm’n, SEC Charges Crypto Entrepreneur Justin Sun and His Companies for Fraud and Other Securities Law Violations, (Mar. 22, 2023), https://www.sec.gov/newsroom/press-releases/2023-59.
[11] Kevin Hurler, SEC Fines Austin Mahone and Soulja Boy Over Crypto Promotion, gizmodo (Sept. 13, 2023), https://gizmodo.com/sec-hunts-fines-austin-mahone-and-soulja-boy-over-crypt-1850835083.
[12] 15 U.S.C. § 77q(b).
[13] 15 USC §78j(b); 17 C.F.R. § 240.10b-5.
[14] Mission, U.S. Sec. and Exch. Comm’n, (Aug. 9, 2023), https://www.sec.gov/about/mission#:~:text=Protecting%20Investors,-The%20federal%20securities&text=We%20protect%20investors%20by%20vigorously,and%20protect%20themselves%20against%20fraud.
[15] Michelle Faverio et al., Majority of Americans aren’t confident in the safety and reliability of cryptocurrency, pew research center (Oct. 24, 2024), https://www.pewresearch.org/short-reads/2024/10/24/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/.
[16] Brown: Crypto Markets’ Lack of Transparency Hurts Americans, United States Comm. on Banking, Housing, and Urban Affairs (Sep. 14, 2023), https://www.banking.senate.gov/newsroom/majority/brown-crypto-markets-lack-transparency-hurts-americans.
[17] Id.
[18] Id.
[19] Mission, U.S. Sec. and Exch. Comm’n, (Aug. 9, 2023), https://www.sec.gov/about/mission#:~:text=Protecting%20Investors,-The%20federal%20securities&text=We%20protect%20investors%20by%20vigorously,and%20protect%20themselves%20against%20fraud.