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Famous internet personalities Logan Paul and NFTs the CryptoZoo project has been accused of engaging in a “rug tug” in a new class action lawsuit.
Announced in September 2021, CryptoZoo is marketed as an NFT-based game and billed as an “autonomous ecosystem” that allows virtual Zoo Keepers to buy, sell, and trade exotic animals on the blockchain, hatching them from eggs upon purchase.
The filing filed in District Court for the Western District of Texas alleges that the defendants “exercised a ‘rug pull,’” promoting CryptoZoo products using Paul’s online followers “to consumers unfamiliar with digital currency products, leading to tens of thousands of people” buying these.
A “rug pull” is a colloquial way of describing instances when a crypto developer raises funds, for example, for a new token or an NFT line, promising consumers certain benefits, but then the developer abandons the project and fails to deliver the promised benefits. , while fraudulently withholding the buyer’s funds.
As per the allegations, the defendants allegedly marketed CryptoZoo NFTs to buyers, claiming they would receive exclusive benefits, rewards, and access to “other cryptocurrency assets at a later date”, as well as online ecosystem support for using and marketing these NFTs. .
The filing then claims that “unbeknownst to the customer, the game did not function or never existed, and the Defendants manipulated the digital currency market for Zoo Token to their advantage.”
In addition, the filing alleges that immediately after completing the sale of all their NFTs, the defendants then transferred the money to a wallet controlled by the defendants.
Logan Paul and CryptoZoo
Paul, 27, currently has more than 23 million subscribers on his YouTube channel, making him one of the platform’s biggest stars.
The list of other defendants includes Paul’s assistant Danielle Strobel, Jeffrey Levin, his manager, Eduardo Ibanez, principal developer of CryptoZoo, Jake Greenbaum, co-founder of CryptoZoo, and Ophir Bentov and Ben Roth.
The lawsuit arose because Paul started taking some liability to recoup losses made by investors in CryptoZoo.
The online star took to Twitter last week to announce a “.3 million bounty program for the disappointed players, also apologizes to the famous crypto YouTuber CoffeeZilla, who has posted a number of videos criticizing Paul for his involvement in the CryptoZoo situation.
This is not the first time that mainstream celebrities have come under scrutiny for their involvement in promoting NFT projects.
In August 2022, US consumer watchdog group Truth in Advertising (TINA) notified seventeen high-profile celebrities for allegedly promoting NFTs without proper disclosure.
Those named include Gwyneth Paltrow, Eva Longoria, Floyd Mayweather, Tom Brady, DJ Khaled, Snoop Dogg and Paris Hilton.
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