Judge Says Plaintiffs Can’t Prove Logan Paul Knew CryptoZoo Would Fail

Magistrate Judge Ronald Griffin has recommended dismissing most of the claims in a class-action lawsuit against YouTuber Logan Paul stemming from the failed NFT project CryptoZoo. In a report filed with an Austin federal court, Griffin concluded that the plaintiffs had not adequately linked Paul to their financial losses or demonstrated his personal involvement in the project’s collapse. The recommendation could lead to the suit being dropped unless the plaintiffs amend their complaint.

Among the 27 claims filed by the plaintiffs, Griffin recommended permanent dismissal of one claim alleging commodity pool fraud, describing the plaintiffs’ argument as requiring “mental gymnastics” to justify. He argued that the plaintiffs failed to demonstrate how the purchase of CryptoZoo NFTs—initially sold as “eggs” that hatched into digital animals—constituted an option contract or contract for future delivery. The judge further noted that the plaintiffs had not established how these purchases met the legal criteria for securities or commodity pool arrangements.

Griffin also recommended allowing the plaintiffs to replead the remaining 26 claims, including allegations of fraud, unjust enrichment, negligence, breach of contract, and violations of consumer law in multiple states. However, he emphasized that the complaint lacked sufficient evidence to tie Paul personally to the project’s collapse. The judge criticized the plaintiffs for relying on “fragments of facts” and vague attributions to “Defendants” rather than demonstrating Paul’s direct involvement or personal financial benefit from the project.

The lawsuit, originally filed in February 2023, accused Paul and the co-founders of CryptoZoo—Eduardo Ibanez and Jake Greenbaum—of orchestrating a “rug pull” by promising unreleased features and rewards that never materialized. In response to the lawsuit, Paul has consistently maintained that the project was derailed by Ibanez and Greenbaum, who allegedly misrepresented the venture. A previous court recommendation had already dismissed Paul’s assistant from the suit, and the judge has rebuffed Paul’s attempts to secure a default judgment against the co-creators.

In January 2023, Paul announced a $2.3 million fund to refund CryptoZoo buyers who were compensated 0.1 ETH—equivalent to the original price of a CryptoZoo NFT—on the condition that they agreed not to pursue legal action. This move has been seen as an effort to mitigate reputational damage amid ongoing legal challenges. Meanwhile, Paul has also initiated a defamation lawsuit against YouTuber Stephen Findeisen (Coffeezilla), alleging that his reports falsely portrayed Paul as defrauding users of the failed NFT project.

Paul’s legal team has expressed satisfaction with the recent developments and indicated their intention to continue litigating until his name is cleared. The plaintiffs, represented by Texas attorney Tom Kherkher, are preparing an amended complaint to address the judge’s concerns and further clarify their claims. The outcome of the case will likely hinge on whether the plaintiffs can present a more compelling case that directly ties Paul to the alleged misconduct surrounding CryptoZoo.

Source:

[1] CryptoZoo Suit Fails to Tie Logan Paul to Collapse: Judge (https://cointelegraph.com/news/cryptozoo-buyers-not-tied-logal-paul-nft-project-collapse-judge)

[2] Logan Paul Shouldn't Battle CryptoZoo Suit, Court ... (https://news.bloomberglaw.com/litigation/logan-paul-shouldnt-battle-cryptozoo-suit-court-recommends)

[3] Judge Backs Logan Paul's Bid to Dismiss CryptoZoo Lawsuit (https://cryptonews.com/news/judge-backs-logan-pauls-bid-to-dismiss-cryptozoo-lawsuit/)