A class action complaint has been filed against CryptoZoo and Logan Paul, alleging that the defendants defrauded customers out of millions of dollars worth of cryptocurrencies. The lawsuit names both of them as defendants.
How the alleged CryptoZoo rug pull happened
According to the complaint filed on February 2nd in the District Court for the Western District of Texas by plaintiff Don Holland, Paul and executives at CryptoZoo offered consumers exclusive access to crypto assets in return for acquiring their nonfungible tokens (NFTs), but they never delivered.
As stated in the court filing, Paul and CryptoZoo marketed their NFTs under false pretenses, claiming that purchasers of their NFTs would receive rewards, exclusive access to other cryptocurrency assets, and an online ecosystem to use and market CZ NFTs.
The filing also alleged that Paul and CryptoZoo committed fraud in connection with the marketing of their NFTs. It is alleged that purchasers transferred crypto money in order to acquire these tokens without being aware that the transaction was part of a fraudulent enterprise.
The accusations mentioned in the complaint include that after all of the NFTs had been sold, the defendant promptly moved the money into wallets that they held on their own.
This included defendants who are now being sued for their involvement with this project, such as Paul’s assistant Danielle Strobel, Jeffrey Levin (Paul’s manager), Eduardo Ibanez (the lead developer of Crypto Zoo), Jake Greenbaum (one of the founders of Crypto Zoo), Ophir Bentov, and Ben Roth. All of these individuals are referred to as “defendants” in the filing.
The news regarding this class-action lawsuit was released not long after Logan Paul used his Twitter account to announce a $1.3 million rewards program for individuals who had been dissatisfied with their gameplay.
He made an effort to respond to some of the concerns raised by Coffeezilla, a popular crypto YouTuber who had posted many videos in which he criticized him for being linked with this situation.
Celebrities put on notice for promoting NFTs
However, he is not the only high-profile celebrity to have done so, as many others, including Gwyneth Paltrow, Eva Longoria, Floyd Mayweather, and Tom Brady, have also done so.
Truth In Advertising (TINA), a consumer watchdog organization in the United States, issued warnings in August 2022 to DJ Khaled, Snoop Dogg, and Paris Hilton for marketing non-fungible tokens (NFTs) without giving the appropriate disclosures.
The situation concerning Logan Paul and CryptoZoo serves as a reminder of how important it is for crypto investors to be aware of potential risks associated with any venture involving cryptocurrencies.
It is advisable for potential buyers always to be vigilant when investing and make sure all promises being made are legitimate before transferring any funds over — especially when enticed by celebrities endorsing unique crypto projects.