A US judge has advised that YouTuber Logan Paul cannot avoid a lawsuit over his failed crypto project, CryptoZoo, by shifting blame to the project’s co-creators.
Magistrate Judge Ronald Griffin on Tuesday urged a federal court in Austin, Texas, to deny Paul’s request for a default judgment against CryptoZoo co-founders Eduardo Ibanez and Jake Greenbaum in a lawsuit by CryptoZoo non-fungible token buyers who claimed the project was fraudulent.
Judge Griffin said to allow Paul’s bid, which would see the court rule against Ibanez and Greenbaum without a trial because they haven’t responded, “would undeniably result in inconsistent judgments.”
A group of CryptoZoo NFT buyers first sued Paul, Ibanez, Greenbaum and others involved in the project in early 2023, claiming it was a “rug pull” and promised perks that never materialized.
Paul filed a counterclaim against Ibanez and Greenbaum in January 2024, claiming he hired the duo to help run the project, but they conned him, causing CryptoZoo’s collapse.
CryptoZoo launched in 2021 and featured NFTs along with a token, but a slated blockchain-based game was never launched.
Suit could collapse if Paul’s motion is allowed: Judge
Judge Griffin said that Paul’s attempt to blame Ibanez and Greenbaum and “inculpate them for the downfall of CryptoZoo and any resulting injury” could see the lawsuit go nowhere as the pair haven’t shown up in court.
“At its core, this case calls on the Court to determine whether Defendants together committed some form of fraudulent acts in the promotion and operation of CryptoZoo,” he added.
“If the Court were to grant default judgment and thereby lay all blame on Ibanez and Greenbaum, what would come of Plaintiffs’ claims as to Paul and the other defendants?”
Paul’s bid is only against his co-founders and not the claims levelled by CryptoZoo buyers, but Judge Griffin said Paul “has not demonstrated — nor is the Court convinced — that, based on the nature of his claims, there exists any reduced risk of inconsistent judgments.”
“The court believes defendants are similarly situated and possess closely related defenses, Plaintiffs charge defendants with some strain of joint liability, and, most importantly, to rule on Paul’s motion at this time would undeniably result in inconsistent judgments,” the judge added.
Paul in legal fight with YouTuber over CryptoZoo claims
In a separate lawsuit in June 2024, Paul sued YouTuber Stephen Findeisen, known as “Coffeezilla,” claiming he made defamatory remarks about CryptoZoo in a series of videos.
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A judge allowed that complaint to go ahead in March, and Findeisen has meanwhile asked for the case to be joined up with the lawsuit against Paul by CryptoZoo NFT buyers, which Paul has opposed.
CryptoZoo NFT buyers refunded
In January 2023, Paul promised to make a plan for CryptoZoo and a year later, put aside $2.3 million for refunds for CryptoZoo buyers under the condition that claimants agreed not to sue over the project.
Paul refunded buyers 0.1 Ether (ETH), the same amount the CryptoZoo tokens were originally sold for in 2021.
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