Logan Paul says he’ll pay back Cryptozoo investors - over a year after he first said he would

Logan Paul/YouTube CryptoZoo World

‘blah blah blah like idk how any of that works’: Logan Paul pleads ignorance in countersuit over failed NFT-crypto game

'who’s in charge?'

 

Marlon Ettinger

Tech

Posted on Jan 5, 2024   Updated on Jan 5, 2024, 11:40 am CST

Influencer Logan Paul announced this week that he’d be partially buying back NFTs for a failed crypto project. First launched in 2021, CryptoZoo was marketed as a blockchain game where you breed eggs into hybrid animals to earn crypto tokens. He also filed a countersuit against his partners, pleading ignorance about NFTs and crypto.

When Paul launched the game in September 2021, he called it a “really fun game that makes you money.”

But the game was never completed, and many investors said they lost money buying tokens to invest in the game.

A three-part series by the YouTuber Coffeezilla in December 2022 told the story of the game’s development and alleged losses by investors, prompting Paul to offer to pay back investors $1.8 million through buybacks.

But Paul dragged his feet for almost a year before the current announcement, claiming that he was investigating the circumstances of the game’s disintegration behind the scenes. In that time, investors filed a suit against Paul and others. 

Alongside the public announcement today, where Paul announced that he’d be spending $2.3 million buying back Base Egg and Base Animal CryptoZoo NFTs, Logan Paul filed a long countersuit in a Texas court against his former associates, Eduardo Ibanez and Jake Greenbaum—also known as Crypto King—where he presented them as bad actors who hijacked the project for their own enrichment against his wishes.

That counterclaim was filed in response to the lawsuit where Paul had been accused of defrauding investors into the project.

The original lawsuit, which was set to be a potential class action filing, was filed in federal court early February last year by a Texas man, Don Holland, who alleged that Paul used his clout to trick tens of thousands of people into purchasing “digital currency products,” or NFTs, which they knew little about.

That lawsuit was filed by two Houston-based lawyers, one of whom, Tom Kherker, is a YouTuber who goes by AttorneyTom and has half a million subscribers of his own.

Included in the initial complaint are members of CryptoZoo’s development team, including Ibanez and Greenbaum, as well as Ophir Bentov, who managed the community. Paul, his personal assistant Danielle Strobel, and his manager Jeffrey Levin are also named as defendants.

Paul’s attorneys listed 12 defenses against the initial charges by Holland, claiming that any damages that Holland—or any potential class members—suffered, was because of actions by Ibanez and the Crypto King. Furthermore, they said that Paul acted in good faith, that Holland was a seasoned cryptocurrency investor who knew and assumed the risks of going into the project, and that he didn’t take adequate measures to mitigate against potential losses.

The counterclaim shows communications between Paul and his team, presenting Paul’s side of the story as one where he was essentially defrauded by Ibanez and Greenbaum. 

Paul accuses Ibanez, who was supposed to be the lead developer of the game, of fabricating his entire backstory. Ibanez claimed to have gone to MIT, worked for the NFL, and hunted terrorists for the CIA.

But according to an investigation by Billy Penn at WHYY, none of that was true, and Ibanez had left behind a trail of debts and unpaid employees in his wake.

According to the counterclaim, Ibanez was introduced to Paul by Mike Majlak, Paul’s Impaulsive podcast co-host who was initially brought onto his team to manage his reputation and keep him in line after he posted a video of a dead body from Japan’s suicide forest in 2018. 

Bentov and Paul found out about Ibanez’ fabricated credentials in October 2021, the document says. When Bentov told Paul that he’d found out that Ibanez had never gone to MIT at all, Paul wrote back “fuckkk . . . I’m gonna kill Mike [Majlak] for introducing me to this fucking guy under the guise of genius development.”

Paul also claimed that he deferred to Greenbaum, AKA the Crypto King, based on his claimed expertise in setting up the token market economy that was supposed to fund the game and manage its in-game economy.

In May he sent a message to other members of the team asking “who’s in charge of the liquidity/token pool blah blah blah like idk how any of that shit works,” and Greenbaum told him he’d be handling it. But according to the filing, Greenbaum and Ibanez then went on to manipulate the so-called liquidity pool before it was open to the public, passing inside information to outside investors who took advantage of the token market to make a profit.

“Logan is trying to shift blame for his conniving activites,” Greenbaum told the Daily Dot, calling the allegations in the countersuit “completely false.”

“He’s trying to defer blame, but all will come out in the court proceedings,” he added.

Paul’s manager Jeffery Levin—one of the defendants in the original lawsuit—didn’t respond to questions about whether Greenbaum’s side of the story was true.

“As far as the game itself,” Paul wrote in his post on X announcing the buyback, “unfortunately it will not be released. I personally spent $400,000 to have it developed and after its completion in early 2023 & some further diligence, unfortunately, there are too many regulatory hurdles that would need to be cleared that I did not originally understand and would ultimately delay this buy-back even further.”

Paul mentions those regulatory hurdles in the counterclaim as well, but doesn’t specify what they are specifically. Lawyers for Paul didn’t respond to questions about what those hurdles are either.

Some people online warned that Paul’s buyback program, which is hosted at EGGNFTBUYBACK.COM and is open until Feb. 8, is another attempt at damage control.

“So what happens if you take Logan up on the Egg buy-back?” asked Rob Freund, a lawyer with a focus in marketing and e-commerce. “You’re effectively removing yourself as a putative class member from the pending CryptoZoo class action against him. Here’s part of what you agree to when you go through the buy-back:”

Unrecorded

Paul argued in his counterclaim, however, that the project was never about making money at all. When Ibanez told him that their market capitalization had hit $100 million, Paul replied “Honestly fuck all that / hope people find the stupid satisfaction we find with hatching their hybrids / That’s what I want / Fuck the token / Fuck everything / I want someone to laugh out loud about this” before sending a picture of a hybrid “Pandacat.”

This story has been updated with comment from Greenbaum.

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*First Published: Jan 5, 2024, 10:06 am CST