CryptoZoo and Logan Paul are named as defendants in a newly filed class-action lawsuit alleging they stole millions of dollars worth of cryptocurrency from purchasers through “fraudulent businesses.”
In a court filing filed Feb. 2 in the U.S. District Court for the Western District of Texas, plaintiff Don Holland alleges that Paul and CryptoZoo (CZ) executives "executed the 'rug' by promising purchasers of non-fungible tokens (NFTs)." "style pull'" for exclusive access to crypto assets, among other benefits, but ultimately abandoned the project and kept the funds.
“As part of Defendants’ NFT scheme, Defendants marketed CZ NFTs to purchasers, falsely claiming that in exchange for transferring cryptocurrency to purchase CZ NFTs, purchasers would subsequently receive benefits, including rewards, exclusive access to other cryptocurrency assets , and online ecosystem support for using and marketing CZ NFTs,” it wrote.
In fact, shortly after the sale of all CZ NFTs was completed, the defendants and others transferred millions of dollars worth of purchasers’ cryptocurrency to, among other things, wallets controlled by the defendants,” it claimed. The lawsuit was filed by attorneys for Ellzey & Associates and Attorney Tom and Associates, the law firm run by YouTube celebrity attorney Tom.
In a YouTube video on Jan. 16, Attorney Tom told viewers that they were suing Paul over the alleged crypto scam after “weeks of investigation and talking to some crypto zoo victims.” According to attorney Tom, other defendants named in the suit include Danielle Strobel, Jeff Levine, Eddie Ibanez, Jack Greenbaum (the king of crypto) and Ofe Al Bentoff (Ben Ross).
The lawsuit comes despite Paul unveiling a $1.5 million recovery plan for disgruntled investors in the CryptoZoo project via a video on Twitter on Jan. 13. He also revealed that he would no longer be suing him over allegations that CoffeeZilla's project was a scam, saying that suing him "would not help Cryptozoo holders," adding that he wanted to focus on "his fans and supporters."
Paul outlined that his recovery plan will consist of three phases the first phase will see him and CryptoZoo co-founder Jeff Levin burn their ZOO token holdings.
He clarified that in doing so they would have "no financial benefit" in the game, and that it would "increase the value of the holder's token."
Paul claims the second phase will involve his personal stake of 1,000 Ether to the project so that "disappointed" investors can burn their NFTs to get back the 0.1 ETH they initially invested, the cost of minting the NFT. In the meantime, he hopes to "deliver the game outlined in the white paper" in the third and final phase.
