Judge Recommends Dismissing Most Claims in Logan Paul’s CryptoZoo Lawsuit

YouTuber Logan Paul has received a favorable recommendation in his ongoing legal battle over the failed NFT project CryptoZoo, as a Texas magistrate judge suggested most claims in a proposed class-action lawsuit should be dismissed.

Magistrate Judge Ronald Griffin, in a 75-page report filed Thursday in Austin federal court, advised that the plaintiffs had not adequately connected Paul to the losses claimed by CryptoZoo investors. The class group, made up of buyers who sued Paul and others in February 2023, alleged the project was a “rug pull” that never delivered on promised rewards.

CryptoZoo Commodity Pool Fraud Claim Permanently Dropped

One claim, however, will not move forward. Judge Griffin recommended that the allegation of commodity pool fraud against Paul be permanently dismissed, describing the argument as a leap in logic

Plaintiffs claimed CryptoZoo NFTs acted as option contracts because the digital assets were initially “eggs” that could hatch into animals and be bred into hybrids with potential trading value

Griffin rejected this view, saying, “The mental gymnastics required to come to this conclusion are truly dizzying,” and noted the plaintiffs failed to show how NFT purchases equated to futures or options contracts.

Plaintiffs Allowed to Amend Other Allegations

While dismissing the commodity fraud claim outright, Judge Griffin left the door open for the class group to amend most of its other 26 claims, including fraud, negligence, unjust enrichment, and breaches of consumer protection laws. He emphasized that the current complaint failed to establish Paul’s direct involvement or prove that he personally profited from CryptoZoo’s collapse.

The judge criticized the plaintiffs’ arguments as “fragments of facts” and noted that many accusations lumped all defendants together without distinguishing their roles. Co-founders Eduardo Ibanez and Jake Greenbaum were also named in the lawsuit, though Paul has previously alleged they deceived him and contributed to the project’s failure.

Paul has attempted to mitigate damages by offering refunds to affected buyers. In early 2023, he announced a $2.3 million compensation plan, offering to reimburse holders at the original sale price of 0.1 Ether per NFT, provided they agreed not to pursue litigation. Thousands of users further reportedly accepted the refunds.

The case will now proceed to a federal judge, who will decide whether to accept Griffin’s recommendations or allow the plaintiffs additional time to strengthen their claims against Paul and his associates.

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