Legal Ruling Against Logan Paul
A federal judge in Austin, Texas, has ruled against YouTuber Logan Paul’s attempt to hold his co-founders responsible for the collapse of his cryptocurrency endeavor, CryptoZoo. Magistrate Judge Ronald Griffin stated on Tuesday that Paul should not be able to assign blame solely to Eduardo Ibanez and Jake Greenbaum in the ongoing legal actions stemming from accusations of fraudulent practices related to the non-fungible token (NFT) project.
Background of the Case
In early 2023, a group of investors who bought CryptoZoo NFTs filed suit against Paul and his collaborators, alleging that they had been duped by a scheme that failed to deliver promised rewards. Since its launch in 2021, CryptoZoo had offered NFTs and tokens, but its anticipated blockchain game was never realized, leading to accusations of what the plaintiffs referred to as a “rug pull”.
Judge’s Remarks
“Allowing this would at best result in inconsistent judgments, which we want to avoid,”
Judge Griffin contended that granting Paul’s request for a default judgment—effectively ruling against Ibanez and Greenbaum because they did not respond to the lawsuit—could result in conflicting legal outcomes. He emphasized that it remains essential to collectively assess whether all defendants, including Paul, are implicated in any alleged wrongdoing regarding the operation and promotion of CryptoZoo.
Counterclaims and Broader Legal Issues
Logan Paul countersued his co-founders earlier this year, alleging that they deceived him while managing the project, which he claims led to CryptoZoo’s disintegration. This legal battle is part of a broader confrontation for Paul, who is also pursuing litigation against fellow YouTuber Stephen Findeisen (alias “Coffeezilla”) for purported defamation concerning his statements about CryptoZoo. Paul’s bid to consolidate these cases is currently under consideration, albeit he has expressed opposition to this effort.
Efforts to Address Investor Discontent
In a move to address the growing discontent amongst NFT buyers, Paul pledged in January 2023 to relaunch CryptoZoo, later allocating $2.3 million for refunds to purchasers who agreed not to pursue legal action against him. Refunds were processed at a rate equivalent to the original sale price of 0.1 Ether (ETH) that was charged for CryptoZoo tokens in 2021. This ongoing legal saga highlights significant tensions within the cryptocurrency community and continues to unfold as parties seek resolution.
