Youtuber Logan Paul is being sued by investors of the CryptoZoo project
Investors led by plaintiff Don Holland have filed a class action lawsuit naming Logan Paul, CryptoZoo Inc., and other executives as defendants.
The lawsuit accuses the youtube influencer of executing a ‘rug pull’
Investors have claimed that the CryptoZoo executives took advantage of Logan Paul’s fanbase, to whom they promoted digital currency products. Given the bestowed trust in their favorite celebrity, tens of thousands of fans purchased the said products.
According to the filing, most people had no idea that the game “never existed” in the first place. Furthermore, they were unfamiliar with the digital products and only purchased them because of the multiple endorsements by Logan Paul through his online platforms.
Holland has also alleged that the defendants manipulated the zoo tokens digital market to their convenience. By executing a rug pull, the CryptoZoo execs solicited their fans to buy their NFTs and other digital assets while promising them tremendous benefits. However, after the colossal purchase, the executives suddenly abandoned the projects and defaulted on delivering the promises made. Even so, they “fraudulently retained” their investors’ funds.
The false claims propagated by the defendants as rewards for purchasing CZ NFTs were desirable. They included several holders’ benefits, an online ecosystem developed for CZ NFTs trading and utility, and exclusive access to certain crypto assets.
However, soon after luring tens of thousands of people to purchase all the CZ NFTs created, the executives transferred millions of dollars worth of investors’ crypto to their wallets, among other places. These actions contributed to the fall of CryptoZoo.
Logan Paul’s recovery plan does not include CryptoZoo’s profitable tokens
Following the CryptoZoo exposé and failure on Jan. 13, 2023, the YouTuber released an apology video through social media a week later. The CZ founder and major shareholder promised to unveil a recovery program to compensate disappointed players.
Through the video, Paul claimed he would burn zoo tokens belonging to him and Jeff Levin, his manager, and co-founder. He also said he would create a reward program for disappointed base animals and egg holders. The influencer also promised to finish and deliver the game.
The new reward program allowed holders to burn their base egg and base animals for an equivalent of 0.1 Eth or a match in BNB. However, CoffeeZilla, the Youtuber behind the CryptoZoo exposé, claimed that the program would “do nothing” for the investors.
In support, the plaintiffs have emphasized that the recovery plan excluded the profitable zoo tokens belonging to the crypto executives. Moreover, the plan only included base animals and base egg NFTs. The third set of CZ NFTs, hybrid animals, was excluded from the program.
Holland has also reiterated that Paul excluded the holders who had sold their CZ NFTs at a loss. Paul also engaged with consumers terming that $ZOO was “not intended to be an investment vehicle.”
Paul defended himself through the conversations with users, saying that the NFTs (base eggs) were 0.1 Eth in the beginning and that he had no influence on the time the users bought or sold them.
As the saga continues, investors count on the justice system to make the fraudsters accountable for counts of fraud, breach of contract, unjust enrichment, and negligence, among others.