Logan Paul Class Action Says YouTuber Pulled the Rug Out from CryptoZoo NFT Buyers

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A Texas police officer alleges in a proposed class action that YouTuber Logan Paul and others manipulated consumers into buying Zoo Tokens and non-fungible tokens (NFTs) for CryptoZoo, an online game that “did not work and never existed.” 

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The 26-page lawsuit alleges Paul and other higher-ups at CryptoZoo executed a “rug pull” whereby they solicited the purchase of NFTs from prospective buyers with the promise of certain perks only to fail to deliver any of the touted benefits, all while fraudulently pocketing money from tens of thousands of people. 

“On information and belief,” the case charges, “Defendants made the business decision to forego an expensive and time-consuming process to create a functional CryptoZoo game or support it, and instead deliberately undertook a scheme to defraud Plaintiff and other consumers.” 

As part of the scheme, the suit says, Paul and co-defendants Danielle Strobel, Jeffrey Levin, Eduardo Ibanez, Jake Greenbaum and Ophir Bentov falsely claimed that CryptoZoo NFTs, which could be purchased with Zoo Tokens, would afford buyers rewards, exclusive access to other crypto assets and “the support of an online ecosystem” to use and market the NFTs, among other benefits. 

From around June 11, 2021, the day Zoo Tokens were released for purchase on the Binance blockchain without public notice, the defendants scooped up the assets at “an artificially low value,” the case states. 

Once the CryptoZoo project was publicly announced, the defendants manipulated the market by selling “large amounts of the digital products for an immediate and large profit,” essentially stealing from investors, the lawsuit alleges. After selling all of their CryptoZoo assets, the defendants transferred millions’ worth of buyers’ cryptocurrency into their own wallets, the complaint says, claiming the parties “knew they were supposed to hold onto any early purchased digital products” until months after the public release of the game, slotted for September 1, 2021,  to avoid a fraudulent “rug pull.” 

“Defendants operated this fraudulent venture to exploit and steal from Plaintiff and other customers who trusted Mr. Paul’s false representations,” the case claims. “As a result, Defendants defrauded Plaintiff and thousands of other consumers, and unjustly enriched themselves by profiting off Plaintiff and others without delivering on their promises.” 

In apparent acknowledgment of the problems with CryptoZoo, Paul on January 13 released a video wherein he promised to “burn” his and Levin’s Zoo Tokens, create a rewards program for “Base Egg and Base Animals” holders and “finish and deliver the game,” the lawsuit relays. Around the same time, the filing says, Paul, or someone on his behalf, posted a message to the CryptoZoo community confirming that those who had already sold their CryptoZoo NFTs would be left out of the rewards program. Paul added that “no one in the CryptoZoo community should put any more money” into the game, framing it as an investment, before stating it was “not intended as an investment vehicle,” the case states.

Lastly, Paul declared that he “would no longer be the scapegoat for anyone’s financial decisions,” seemingly denying responsibility for the CryptoZoo community’s losses, the suit shares. 

The lawsuit looks to cover all persons who bought Zoo tokens and/or CryptoZoo NFTs while in Texas.

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