Aussie investors are part of class action against the YouTube sensation’s failed CryptoZoo NFT experiment. Paul is defending the action. See how it unfolded.
“If I randomly saw him in public I’d call him a “sub human c**t” just so he got a taste of Aussie culture,” said user ‘slow_hank’ after Paul announced his trip to Australia in February.
Dan, a father of two who started the group, watched from his western Sydney home.
For months, $captndandan, as he’s known on the Discord messaging platform, had been playing an instrumental role in gathering evidence and bringing together investors in Paul’s cryptocurrency “Zoo Token” and NFT game “CryptoZoo”.
The efforts of Dan, along with a small cadre of Australian and international CryptoZoo users, are behind a massive United States civil lawsuit seeking punitive damages that could climb into the tens of millions, or more, and that is poised to take down the crypto empire of the internet’s biggest celebrity.
Paul’s lawyers have consistently maintained the suit is ‘careless’ and has ‘no merit’.
“The money is the money, whatever. I just want the public to know the type of person that he is,” said Dan, who spoke on the condition of anonymity.
“Because we see him flying over to Australia, within 10km of my house, and people were lined up on the streets, chanting his name, because of a stupid drink.”
Logan Paul while he was in Australia on a whirlwind tour. Picture: NCA Newswire/ Gaye Gerard
The same month he visited Australia, the class action lawsuit was filed against CryptoZoo Inc, Paul, and his business associates, in the US District Court claiming several civil allegations of fraud, including breach of contract, unjust enrichment, negligence, and violation of prohibited trade practices, among others.
A group of Australians are behind a civil lawsuit poised to take down the crypto empire of Logan Paul, who is being sued over the failed Not game CryptoZoo.
An estimated $A1.1 million to $A1.5 million in combined losses of about a half-dozen Australians represent a small portion of damages being sought globally.
But their dogged investigations fuelled the class action and mountain of individual arbitration cases now being faced by one of the rare internet personalities to crossover from YouTube stunt videos to mainstream bookings; from the WWE wrestling ring to the Today Show studio.
Logan Paul and KSI on the Today show in February this year. Picture: Today/Channel 9
“They deserve a ton of credit because they didn’t back down,” said lawyer Tom Kherkher, who filed Holland v CryptoZoo Inc, Logan Paul, et al, in the Western District of Texas.
“Logan Paul, he’s a bona fide celebrity, he gets hundreds of millions of views a month. He has a fan base who will do anything he says.
“This wasn’t just a cryptocurrency. He was promising an ecosystem. He was promising the next Pokemon and it just didn’t exist.
Fans are seen gathered outside the Today Show Studios in North Sydney waiting to see Logan Paul. Picture: NCA Newswire/ Gaye Gerard
“They misrepresented what this whole thing was. They said there was going to be an ecosystem of collectibles. People can buy and sell and trade things. That just never happened.
Kherkher said of the lawsuits’s allegations against Paul.
CryptoZoo was launched in late 2021 and was described by Paul as a game that “makes money”.
It allowed players to use a new “Zoo Token” coin to buy and sell Non-Fungible Tokens (NFTs), digital eggs that would hatch into animals that could be combined to form new, rarer NFTs of the resulting hybrid creations.
But the online mash-up of blockchain technology and Pokemon trading, like the virtual eggs themselves, never hatched.
The lawsuit also names CryptoZoo co-founders Jake Greenbaum and Eddie Ibanez, community manager Ophir Bentov, as well as Paul’s manager, Jeffrey Levin, and assistant Danielle Strobel.
His co-accused Jake Greenbaum, aka ‘CryptoKing’, who is a co-founder of CryptoZoo.
“The Defendants executed a ‘rug pull’, which is a colloquial term used to describe a scheme in which an NFT developer solicits funds from prospective NFT purchasers promising them certain benefits,” the civil lawsuit alleges.
“Once the purchasers’ funds are used to purchase the NFTs, the developers abruptly abandon the project and fail to deliver the promised benefits all while fraudulently retaining the purchasers’ funds.”
The class action was filed shortly after Paul posted an apology video where he vowed to finish the game and set up a $US1.3 million rewards program, which the class-action and other claimants say they’ve never seen.
“The CryptoZoo [claimants] were conducting their own investigation for probably about a year before I even got invited to the Discord server,” Mr Kherkher said, referencing the “CryptoZoo Victims” chat group on the Discord messaging platform.
US lawyer Tom Kherkher. Picture: Supplied
Another Co-accused Jeffrey Levin (left), who is Logan Paul’s manager. Picture: Supplied
“These people gathered intel, they are very organised, because they are very upset. There are a lot of people who lost a lot of money, and they have a very strong community.”
The first message to the CryptoZoo Victims chat group was posted by Dan, who works in manufacturing sales, on September 26, 2022.
“Fellas, get anybody you know that has been wronged by CZ [CryptoZoo] & we will work on what is possible to recoup the losses via official means,” Dan wrote.
“Get everybody to join & we will try to co-ordinate some tweets to get Coffeezilla’s attention,” he added.
Coffeezilla is Stephen Findeisen, a massive American YouTube content creator with 2.8 million subscribers who investigates the crypto world.
After publishing the first of a three-part series picking apart the CryptoZoo saga in December, the story caught fire online, was watched over 20 million times combined, and prompted a ballistic response from Paul promising to sue Findeisen before the threat was walked back in an apology video.
CryptoZoo, which was Logan Paul’s brainchild. Picture: Supplied
“Coffeezilla is not a criminal,” Paul said. “My initial response to his series was that of fire and ego, flair, whatever it is, pride, I’m a fighter at heart and I was defensive because I know I never scammed anyone with this project.”
Lawyers for Paul did not respond to requests for comment, but legal representative Jeffrey Neiman has previously issued the statement: “This is a careless civil action, which is dramatically flawed and filed with the intention of generating headlines, not merit. We are confident that once reviewed in a court of law, this matter will swiftly be dismissed.”
In his apology video, Paul said he was “disappointed in how the game was handled internally” and claimed “a full internal investigation”.
“We are going to pursue full legal action for whoever needs to be held accountable,” Paul said.
The apology was cold comfort to Dan and other Australians like Josh, known online as CryptoMan69, who himself lost $500,000 to CryptoZoo.
Australian victim “Josh”, who goes by CryptoMan69 in the CryptoZoo community. Picture: Supplied
“When we started working with Coffeezilla part of the process was verifying people’s wallets, so they would give us wallet address, we would go in and actually look at the blockchain and see the amount of money,” Dan said.
“About $US15K ($A23,000) is what I’ve lost. I was buying and selling a lot, so I recouped some of my losses there.
“I never really wanted to be in for that much money but I guess I was suckered into it like everybody else where I put in an initial amount, roughly $5,000, and then that went up to about $40,000 within a week. I was like, wow, that’s amazing, this is going to be great.
“And stupidly I should have taken the money then but I didn’t,” he added.
“As it got lower I brought more thinking it would go back up a bit and then I’ll take my money out. And it just never went back up.”
Social media and WWE Superstar Logan Paul with Prime (energy drink) Picture: Instagram/loganpaul-Prime
International claimants like Dan, bound by terms of service that prevent participation in group action, form part of a mountain of individual arbitration cases to be filed in the US state of Delaware, where CryptoZoo Inc is based. Australians caught up in CryptoZoo can reach out to Mr Kherkher or their own lawyer to seek arbitration.
But under a quirk of Texas law, where the class action is filed, Mr Kherkher argues the CryptoZoo terms are not binding, allowing residents of the Lone Star State to bring legal action on behalf of those affected.
Thanks to the CryptoZoo Victims chat group spearheaded by Dan, Mr Kherkher was connected with one of the group’s earliest members, Texan police officer Don Holland.
Don Holland, a Texas police officer who is the named plaintiff in the Logan Paul case. Picture: Supplied
Mr Holland, the named plaintiff in the class action, is a father of six who thought CryptoZoo would be a fun game to teach technology to his son, while bonding over the 10-year-old’s fandom of the YouTube star.
Highly active in the blockchain community, Mr Holland happens to have a tech background from a career at Dell computers until the 9/11 terror attacks compelled him to serve as a police officer.
The dual careers gave him the expertise, and motivation, in both technology and law to seek justice in the civil law sphere.
“People should be held accountable for whatever they do. That’s part of the law,” Mr Holland in his first interview about the lawsuit.
“My son still asks me, to this day, when does this game come out. I haven’t had the heart to say,” he added.
Paul, standing alongside KSI during their wild Today Show interview, deftly dodged the eggs that smashed near the feet of anchor, Stefanovic. There is no suggestion that Stefanovic is involved in any way.
But Aussie Dan, Texan Don, and lawyer Tom are working overtime with the rest of the CryptoZoo community to ensure the YouTube sensation’s failed NFT experiment leaves more than just egg on his face.