Logan Paul sued for alleged CryptoZoo ‘rug pull’
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Social media influencer Logan Paul was accused in a class action lawsuit this week of executing a so-called rug pull—crypto slang for cheating investors—for his Web3 game CryptoZoo, which never materialized.
The company behind the game, CryptoZoo Inc, which the lawsuit alleges is owned by Paul, created and sold the cryptocurrency “Zoo Tokens,” which were meant to be used to buy the company’s CryptoZoo NFTs of exotic animals.
The lawsuit alleges that Paul and the other defendants promised buyers that they 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.”
In reality, Paul went on to promote other projects and executed a rug pull as the game and benefits associated with buying CryptoZoo’s products never appeared, according to the lawsuit.
The suit also claims that Paul and the other defendants profited from manipulating the market for Zoo Tokens.
“Soon after completing the sale of all their CZ NFTs, Defendants, together with others, transferred millions of dollars’ worth of purchasers’ cryptocurrency to, among other places, wallets controlled by Defendants,” the lawsuit reads.
Other people named in the suit are Paul’s assistant Danielle Strobel, Logan Paul’s manager Jeffrey Levin, the lead developer of CryptoZoo, Eddie Ibanez, CryptoZoo cofounder Jake Greenbaum, and CryptoZoo community manager Ophir Bentov.
The suit comes after Paul said last month that he would refund 1,000 Ether, or about $1.6 million as of Friday, to CryptoZoo users. Responding to pressure from YouTuber Coffeezilla, Paul said he would finish the project and said he and his manager, Levin, would burn their tokens so they would not financially benefit from it.
Still, the lawsuit claims the rewards program is not enough.
“The program does not include Defendants’ profitable Zoo Tokens used to participate in the failed CryptoZoo or the third set of CZ NFTs, Hybrid Animals,” it reads.
Other people on Twitter were similarly upset about Paul’s actions with CryptoZoo.
https://twitter.com/dachsaus/status/1621552733751836673
One user said they had lost $10,000, although Fortune could not verify their claim.
https://twitter.com/husseino_1o1/status/1621394328193990657
This story was originally featured on Fortune.com
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