Christian Petersen
- Logan Paul has been named as a defendant in a lawsuit that alleges he promoted a crypto scam.
- It alleges the CryptoZoo venture was a "rug pull" because it never launched but held onto buyers' money.
- YouTuber star Paul previously laid out a three-stage recovery plan to return the lost funds.
Logan Paul has been named as a defendant in a lawsuit that alleges the YouTube star helped perpetrate a crypto "rug pull" scam by promoting an NFT-based project that scooped up buyers' money.
Plaintiff Don Holland is suing the media personality and professional wrestler for promoting CryptoZoo, a venture that sold NFTs, but then never launched and has failed to return customers' funds.
"Defendants promoted CryptoZoo's products using Mr. Paul's online platforms to consumers unfamiliar with digital currency products, leading to tens of thousands of people purchasing said products," the proposed class-action lawsuit filed Thursday reads.
"Unbeknownst to the customers, the game did not work or never existed, and Defendants manipulated the digital currency market for Zoo Tokens to their advantage," it said.
After the finishing the sale of all the CryptoZoo NFTs, the defendants and others transferred millions of dollars in buyers' cryptocurrency to wallets controlled by those accused, it alleged.
Paul's associates Danielle Strobel, Jeff Levin, Ebbie Ibanez, Jake Greenbaum, and Ophir Bentov were also named as defendants in the lawsuit, according to the court filing.
"Rug pulls" are crypto scams where a developer sells NFTs or other tokens associated with a project to people before the project has actually launched. The developer then abandons the project and holds onto the money.
In December, YouTube investigator Stephen "Coffeezilla" Findeisen released a series of videos where he alleged CryptoZoo was Paul's "biggest scam".
Paul proceeded to threaten to sue the content creator, before making a stunning aboutface to claim he was glad that the issues with the project had been raised.
The YouTuber has since said he plans to implement a three-stage plan to try to recover buyers' lost funds.
In the first stage, Paul and CryptoZoo co-founder will burn all of their holdings of the project's native token to boost prices and ensure they have no further stake in the project.
Paul then plans to spend 1,000 ether tokens, valued at just under $1.7 million as of Friday, to buy NFTs from investors who want to abandon the CryptoZoo project.
The third stage of Paul's recovery plan is to "deliver the game as outlined in the whitepaper," the media personality and professional wrestler has said.
Paul and the plaintiff's lawyers Attorney Tom did not immediately respond to Insider's requests for comment.