- Popular YouTuber Logan Paul and NFT project CryptoZoo have been accused of engaging in a “rug pull” in a new class-action lawsuit.
- Plaintiff Don Holland alleges that Paul and executives at CryptoZoo (CZ) executed a ‘rug pull,’ promising buyers of NFTs exclusive access to crypto assets, among other benefits.
- The case comes despite Paul disclosing a $1.3 million recovery plan for disgruntled investors in the CryptoZoo project.
Logan Paul and his NFT project ‘CryptoZoo’ are the subject of a new class-action lawsuit filed by Don Holland. The plaintiff alleges that the YouTube influencer’s project was a “rug pull.”
According to Holland, the “fraudulent venture” saw Paul and his project steal millions of dollars worth of purchaser’s cryptocurrency. This came after they promoted CryptoZoo’s products using Paul’s online following “to consumers unfamiliar with digital currency products, leading to tens of thousands of people” purchasing these.
Holland filed the case on February 2 in the Western District of Texas District Court alleging that Paul and executives at CryptoZoo (CZ) executed a ‘rug pull’ by promising buyers of the non-fungible tokens (NFTs) exclusive access to crypto assets, among other benefits.
“As part of the NFT scheme, Defendants marketed CZ NFTs to purchasers by falsely claiming that, in exchange for transferring cryptocurrency to purchase the CZ NFT, purchasers would later receive benefits, including, among other things, rewards, exclusive access to other cryptocurrency assets, and the support of an online ecosystem to use and market CZ NFTs.”
Ultimately, Paul and his colleagues abandoned the project and kept the funds. From the filing, “unbeknownst to the customers, the game did not work or never existed, and Defendants manipulated the digital currency market for Zoo Tokens to their advantage.”
The class-action lawsuit alleges that, in reality, the defendants transferred millions of dollars worth of purchasers’ crypto to their wallets, among other places, soon after completing the sale of all their CryptoZoo NFTs.
Attorneys from Ellzey & Associates and Attorney Tom and Associates submitted the lawsuit. Notably, Tom and Associates law firm is run by YouTube personality Attorney Tom, who, in a Twitter post, wrote:
“We have officially filed a class action lawsuit in the Western District of Texas against Logan Paul et al. for the CryptoZoo fiasco. (This is in addition to the numerous cases heading to arbitration on the matter.”
In a YouTube video dated January 16, attorney Tom told his viewers that they are filing a case against Logan Paul over the alleged cryptocurrency fraud. The legal rep said they reached that decision after “weeks of investigation and speaking to several CryptoZoo victims.”
According to Attorney Tom, the lawsuit is not limited to Logan Paul and the CZ project alone but to other defendants. He names Danielle Strobel, Jeff Levin, Eddie Ibanez, Jake Greenbaum (Crypto King), and Ophir Bentov (Ben Roth).
Notably, a “rug pull” is a colloquial way to describe situations where a crypto developer raises funds for a new token or NFT line with the promise of certain consumer benefits. In the end, however, the developers abandon the project and fail to deliver the promised benefits while fraudulently retaining the buyers’ funds.
Logan Paul’s Three-Step Plan
The case comes despite the YouTuber [Logan Paul] disclosing a $1.3 million recovery plan for disgruntled investors in the CryptoZoo project through a Twitter video on January 13. In the video, Paul explains his three-step plan.
First, Logan and co-founder of CryptoZoo, Jeff Levin, will burn their ZOO token holdings to eliminate any financial upside in the game while adding value to holders’ tokens.
Secondly, they will offer a rewards program for players disappointed in the game’s status, such that they can burn their base egg or base animal for the mint prize of 0.1 ETH or the equivalent in BNB. As regards this step, Logan has committed 1000 ETH (around $1.3 million) for players who want to get out.
Thirdly, they will finish and deliver the game as outlined in the whitepaper by completing the Egg Bridge from ETH to BSC, from base animals and base eggs, and completing the marketplace and releasing animals into the wild to accrue the yield function.
The YouTuber also noted that he is no longer going after CoffeeZilla for alleging that his project is a scam, highlighting that suing him is “not going to help CryptoZoo holders.” In closing, he reassured his plans to focus on “fans and supporters.”
About CryptoZoo
CryptoZoo was first announced in September 2021, with advertisers pedaling it as an NFT-based game. The marketing also stated that it would be billed as “an autonomous ecosystem” that would allow virtual Zoo Keepers to buy, sell, and trade exotic animals on the blockchain, hatching them from eggs at the time of purchase.
