Judge Blocks Logan Paul from Blaming Co-Founders in CryptoZoo Collapse Lawsuit

A U.S. judge has ruled that YouTuber Logan Paul cannot seek to assign sole blame for the collapse of his crypto project CryptoZoo to its co-founders, Eduardo Ibanez and Jake Greenbaum. Magistrate Judge Ronald Griffin, advising a federal court in Austin, Texas, on Tuesday urged denial of Paul’s request for a default judgment against the pair. The judge argued that allowing Paul’s motion—which sought to hold Ibanez and Greenbaum solely responsible for the project’s failure without a trial—would risk creating “inconsistent judgments” given the broader legal claims by CryptoZoo NFT buyers [1].

The lawsuit, initiated by NFT buyers in early 2023, alleges the project was a “rug pull,” with promised features and perks never materializing. CryptoZoo, launched in 2021, centered on NFT “eggs” that hatched into tradable animals but never delivered the blockchain-based game it advertised. Paul filed a counterclaim in January 2024, accusing Ibanez and Greenbaum of defrauding him and causing the project’s collapse. However, Judge Griffin emphasized that the co-founders’ absence from court proceedings does not justify isolating them as defendants. “The court believes defendants are similarly situated and possess closely related defenses,” the judge stated, noting that plaintiffs have also accused Paul and others of joint liability [1].

The judge’s reasoning hinges on the interconnected nature of the legal claims. If the court were to grant Paul’s motion against Ibanez and Greenbaum, it would complicate the broader lawsuit against all defendants, including Paul himself. This could leave unresolved whether the project’s collapse resulted from individual or collective misconduct. The ruling effectively underscores the need for a unified trial to determine liability across all parties.

In parallel, Paul has faced separate legal challenges. In June 2024, he sued YouTuber Stephen Findeisen (known as “Coffeezilla”) over critical videos about CryptoZoo, with Findeisen seeking to consolidate the case with the NFT buyers’ lawsuit—a move Paul has opposed. Meanwhile, in January 2023, Paul announced a $2.3 million refund plan for CryptoZoo buyers, offering 0.1 ETH (equivalent to the 2021 purchase price) under terms requiring claimants to waive further legal action.

The judge’s decision highlights the complexities of multi-party crypto litigation, where overlapping claims and defenses necessitate a coordinated judicial approach. For investors, the case underscores the risks of relying on high-profile projects with unresolved legal histories. The outcome could influence how courts address joint liability in decentralized ventures, where roles and responsibilities are often ambiguously defined.

Source: [1] [Logan Paul can’t blame CryptoZoo co-founders for collapse, judge says] [https://cointelegraph.com/news/logan-paul-shouldnt-blame-cryptozoo-founders-judge-says]