Logan Paul’s CryptoZoo Scam Was a Breakout Moment for Bad Crypto
In the past few years, crypto has cycled through a number of celebrity backers. Logan Paul is possibly the industry’s least helpful.
When you’re a relatively new technology, surrounded by a high degree of skepticism, the last thing you need is controversy. 2022 had that in spades. If the implosion of Terraform Labs and FTX wasn’t enough, we had a few celebrity scandals to deal with too.
On the more minor end, we had the SEC charging Kim Kardashian for unlawfully touting a security. As part of the settlement, Kardashian agreed to pay $1.26 million in penalties, disgorgement, and interest, as well as cooperate with the Commission’s investigation.
At the spicier end, we had Logan Paul and the Cryptozool scandal. Unless you were hiding under a rock, or deeply interested in either Logan Paul or crypto, you would have heard about this.
CryptoZoo was launched in 2021 after first being discussed on Paul’s podcast Impaulsive. He described it as a “really fun game that makes you money.” The game involved hatching and breeding animals from NFT eggs, which, according to Paul, him and his team had spent six months designing. In an interview with Forbes last October, he said he called it “probably even more relatable and universal than Pokemon.”
Paul’s said it was his intention to raise one million dollars to create the game and NFTs. To acquire the eggs, players had to purchase the game’s ZOO token. However, his interest in CryptoZoo apparently waned after he sold millions of NFTs and ZOO tokens.
The CryptoZoo Scandal Put a Lot of Unwanted Attention on Logan Paul
However, it wasn’t until Coffeezilla, a YouTuber sleuth, published a video series last December that it blew up. The video journalist, whose real name is Stephen Findeisen, called CryptoZoo Paul’s “biggest scam.”
According to Google Trends, the Coffeezilla video series caused a significant spike in interest in Logan Paul. It was his biggest global breakout moment in 2022 that was not associated with either fighting or wrestling. In the United States, the CryptoZoo scandal was his joint second most searched event alongside his WWE debut at Wrestlemania 38 in April, and his boxing rematch with fellow YouTuber KSI in August. Both of those matches pre-planned and widely-covered by sports and traditional media.
The CryptoZoo scandal was only beaten by Paul’s second wrestling match of the year. In November of 2022, Paul returned to the WWE Universe to headline Crown Jewel in Saudi Arabia. In that match-up, he fought 37-year old wrestler Roman Reigns.
Logan Threatened Coffezilla With Legal Action
In a since-deleted response video, Paul threatened to sue Findeisen for defamation. However, Findeisen tweeted later that Paul called him to confess that he was dropping his lawsuit threats. In a post on the CryptoZoo Discord group, Paul claimed that his initial response was “rash and misaligned.”
“I’m grateful he brought this to light. I will be taking accountability, apologizing, and coming forward with a plan in the near future.”
It is likely that Paul was advised by his legal team to avoid taking Findeisen to court, as that would open up Paul to discovery. However, the legal drama is far from over. In Early February, Paul and his associates were accused of a “rug pull” in a new class action lawsuit. They are accused of promoting CryptoZoo’s products using Paul’s online following “to consumers unfamiliar with digital currency products.”
The filing claims that “unbeknownst to the customers, the game did not work or never existed.” The “defendants manipulated the digital currency market for Zoo Tokens to their advantage.”
Not The First Celebrity Scandal, And Certainly Not The Last
Logan Paul is certainly not the first celebrity involved in a crypto legal dispute. Recently, Tom Brady, Gisele Bundchen, David Ortiz, Kevin O’Leary and others were sued in November by an FTX investor for their endorsement of the now-defunct crypto exchange. In early December, Brady and Ortiz were again named in a similar lawsuit.
In 2018, Floyd Mayweather and DJ Khaled were both caught up in legal issues with Centra Tech, a Miami-based startup that claimed to offer a cryptocurrency debit card. Both celebrities endorsed Centra Tech on their social media accounts and helped promote the doomed ICO that fleeced investors of $25 million.
However, Centra Tech had falsely claimed to have partnerships with several financial institutions and misled investors by claiming to have a functioning product. The SEC charged Centra Tech’s co-founders, Sam Sharma and Robert Farkas, with securities fraud, and they were later sentenced to prison. Floyd Mayweather and DJ Khaled were subsequently sued by investors.
In a settlement with the SEC, Floyd Mayweather agreed to pay $614,775, while DJ Khaled agreed to pay $50,000 and to not promote any securities, including cryptocurrencies, for two years. In a shocking display of hubris, Mayweather made another entry into the crypto world last year with his Mayveverse. At the time, the champion boxer said: “Mister I don’t lose at nothin is back, and if you in the NFT world, and you betting on me, you will never lose.”