CryptoZoo, Logan Paul Sued for $5M Over his allegations
Both CryptoZoo and Logan Paul have been listed as defendants in a recently filed class-action complaint. The claim argues that the defendants engaged in a "fraudulent business" that resulted in the theft of cryptocurrencies worth millions of dollars belonging to customers.
Plaintiff Don Holland alleged in a court filing that Paul and executives at CryptoZoo (CZ) "executed a 'rug pull'" by promising purchasers of the nonfungible tokens (NFTs) exclusive access to crypto assets among other benefits, but ultimately abandoning the project and keeping the funds for themselves. The filing was made on February 2 in the District Court for the Western District of Texas.
"As part of Defendants' 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," the document stated. These benefits included, among other things, rewards, exclusive access to other cryptocurrency assets, and the support of an online ecosystem to use and market CZ NFTs.
It is alleged in the document that "in actuality, shortly after completing the sale of all of their CZ NFTs, Defendants, together with others transferred millions of dollars worth of purchasers' cryptocurrency to, among other places, wallets controlled by Defendants," shortly after the sale of all of the defendants' CZ NFTs was completed.
The case was filed by lawyers from Ellzey & Associates as well as Attorney Tom and Associates, the latter of which is the name of the legal company that is owned and operated by Attorney Tom, a popular YouTube celebrity.
After "weeks of research and speaking to a number of Crypto Zoo victims," Attorney Tom revealed to viewers on January 16 in a video uploaded to YouTube that they would be bringing a lawsuit against Paul in relation to the alleged cryptocurrency fraud.
According to Attorney Tom, the action also names as defendants Danielle Strobel, Jeff Levin, Eddie Ibanez, Jake Greenbaum (Crypto King), and Ophir Bentov (Ben Roth). All of these individuals are also being accused of wrongdoing.
This lawsuit was filed despite the fact that Paul revealed in a video posted on Twitter on January 13 a $1.5 million recovery plan for unhappy investors in the CryptoZoo business.
In addition to this, he disclosed that he will no longer be suing CoffeeZilla about the latter's accusations that his project is a fraud. He said that suing CoffeeZilla would "not benefit Cryptozoo holders" and that instead, he would want to concentrate on "friends and supporters of him."
Paul said that his strategy for recovery would be divided into three parts, adding that the first step will include him and Jeff Levin, the other co-founder of CryptoZoo, destroying all of their ZOO token holdings.
He emphasised that as a result of taking this action, they would "have no financial upside" in the game, and that it will "increase value to the holders' tokens."
Paul said that the second step would entail him making a personal contribution of 1,000 ether (ETH) to the project. This, he said, will make it possible for "disappointed" investors to burn their NFTs in order to recoup their original investment of 0.1 ether, which is the cost to mint the NFT.
In the meanwhile, he is working on the third and final stage, which should "deliver the game as detailed in the whitepaper."