Logan Paul Lawsuit Against Coffeezilla: CryptoZoo Saga Explained

Popular Youtuber, social media influencer, and now pro-wrestling star Logan Paul is back in the crypto space, now because of a new lawsuit. On 27 July, Logan Paul filed a defamation lawsuit against Stephen Findeisen, better known as Coffeezilla, in a San Antonio, Texas, District Court. This lawsuit centers around a series of videos that Coffeezilla produced in late 2022, which accused Paul of scamming his followers through his NFT project, CryptoZoo. 

Lawsuits aren’t unusual in crypto. In fact, until 2023, there had been over 80 class action lawsuits involving digital assets in the US alone. Who could forget the infamous lawsuit against FTX’s Sam Bankman-Fried? However, Logan Paul’s recent actions are unique, because it comes more than two years after Coffeezilla released his initial video on CryptoZoo. 

This article will discuss the details of Logan Paul’s latest and the entire CryptoZoo saga, which continues after three years.

responding today to Logan Paul's lawsuit. pic.twitter.com/gPMvn7nzYL

— Coffeezilla (@coffeebreak_YT) August 5, 2024

Understanding Logan Paul and Coffeezilla’s lawsuit

Paul's lawsuit claims that Coffeezilla "maliciously and repeatedly" published false statements, labeling the project as a "scam" orchestrated by Paul. These videos gained significant attention, reportedly damaging Paul's reputation. One such video, ‘Investigating Logan Paul's Biggest Scam’, gained over 10 million views on YouTube at the time of writing. 

Paul argues that Coffeezilla's narrative omitted key details that would have shown Paul’s genuine commitment to the project and that Paul did not profit from it. He also accuses Coffeezilla of knowingly spreading false information for personal gain, including monetizing his content through platforms like Patreon.

The lawsuit seeks over $75,000 in damages, along with interest, legal fees, and other relief determined by the court. Paul blames the project's failure on two advisers, Eduardo "Eddie" Ibanez and Jake Greenbaum, whom he accuses of misleading him and derailing the project.

This legal battle highlights the ongoing tension between influencers and those who critique them on platforms like YouTube. Coffeezilla has yet to fully respond to the lawsuit, and it remains to be seen how the court will address the claims. 

Logan Paul says me interviewing people who lost money in CryptoZoo is "milking the shit out of it", and if I continue to do so and call this a scam: it's going to be worse for me in his lawsuit. pic.twitter.com/quDUrd4ELm

— Coffeezilla (@coffeebreak_YT) January 4, 2023

As of now, detailed information about the trial schedule, such as hearing dates or expected timelines, has not been disclosed publicly. The case will proceed through the Texas court system, and both parties are expected to present their arguments regarding the alleged defamation and its impact on Paul's reputation​. 

What is CryptoZoo? 

CryptoZoo was an NFT (non-fungible token) project launched by Logan Paul in 2021. The project was marketed as a "fun game that makes you money." The concept of CryptoZoo involved players purchasing NFT "eggs" using the project's native token, ZOO. 

These eggs would hatch into unique animals, which could then be bred to create hybrid animals, with the aim of creating rarer and more valuable NFTs. Players could trade these hybrid animals on the marketplace and earn ZOO tokens, which were expected to increase in value as the game gained popularity.

Launch and problems

The project generated significant buzz due to Logan Paul's involvement and the promise of high returns for participants. However, shortly after the project’s launch, it became clear that CryptoZoo was not delivering on its promises. Key elements of the game were not functioning as advertised, and many investors who purchased the NFTs and ZOO tokens found themselves holding assets that quickly depreciated in value. By late 2021, it was evident that the project had failed to live up to its expectations, with many users accusing Paul of scamming them.

Coffeezilla’s investigation

In late 2022, Stephen Findeisen, known as Coffeezilla, with over 3.7 million subscribers on YouTube, released a three-part investigative series on CryptoZoo, branding it as "Logan Paul’s biggest scam." The videos detailed the failures of the project and suggested that Paul had intentionally misled his fans for personal profit. Coffeezilla's series quickly gained millions of views, bringing widespread attention to the controversy. The investigation alleged that Paul and his team had collected money from NFT holders without delivering the promised project, leading to significant financial losses for many participants.

Logan Paul’s response and legal actions

Initially, Logan Paul denied the accusations, stating that he had been committed to making CryptoZoo a success but had been misled by advisers involved in the project. He claimed that individuals like Eduardo "Eddie" Ibanez and Jake Greenbaum, who were central to the project’s development, had deceived him and that they were the true culprits behind CryptoZoo’s failure.
 

Despite considering legal action against Coffeezilla at the time, Paul chose to focus on "making things right" with a $1.5 million recovery plan intended to compensate those who had lost money in the project. He reportedly spent over $1 million buying back the NFTs between January and March 2023, although this did little to restore his reputation.

Fast forward to July 2024, Paul finally decided to file a defamation lawsuit against Coffeezilla, alleging that the YouTuber had knowingly spread false information for personal gain, damaging Paul's reputation.

In response to the lawsuit, Coffeezilla released a new video, calling this action “groundless, meritless and frivolous.”

Celebrities have a history of failed crypto projects 

1. EthereumMax (Kim Kardashian, Floyd Mayweather, and Paul Pierce)

• Project overview: EthereumMax (EMAX) was a cryptocurrency that gained massive attention due to endorsements from celebrities like Kim Kardashian, Floyd Mayweather, and Paul Pierce. The project promised high returns and was heavily promoted on social media.
• Failure and lawsuit: In January 2022, a class-action lawsuit was filed against Kardashian, Mayweather, and others, alleging that they promoted a "pump and dump" scheme. The lawsuit claimed that the celebrities misled their followers into buying the tokens, which later plummeted in value. EthereumMax's value dropped dramatically after the initial hype, leading to significant financial losses for investors.
• Outcome: The lawsuit is still ongoing, with claims that the celebrities were paid to promote the cryptocurrency without disclosing their financial ties, thus violating securities laws​.

2. Centra Tech (Floyd Mayweather and DJ Khaled)

• Project overview: Centra Tech was a cryptocurrency startup that launched an initial coin offering (ICO) in 2017. It claimed to offer a crypto debit card backed by Visa and Mastercard, allowing users to spend their cryptocurrencies in real-world transactions. Floyd Mayweather and DJ Khaled promoted Centra Tech on social media.
• Failure and lawsuit: In 2018, the founders of Centra Tech were arrested and charged with fraud. The SEC alleged that the ICO was fraudulent, with fake partnerships and misleading marketing. Mayweather and Khaled were later charged by the SEC for unlawfully promoting the ICO without disclosing that they were paid to do so. Both settled with the SEC, agreeing to pay fines and penalties.
• Outcome: The Centra Tech founders were sentenced to prison, and the project collapsed, with investors losing millions. Mayweather and Khaled's involvement highlighted the risks of celebrity endorsements in the cryptocurrency space​.

3. Fyre Festival (Ja Rule)

• Project overview: Although not a cryptocurrency or NFT project, the Fyre Festival is a notable example of a celebrity-endorsed venture that failed disastrously. Promoted by rapper Ja Rule and other influencers, Fyre Festival was billed as a luxury music festival in the Bahamas. Attendees were promised an extravagant experience with top-tier accommodations, gourmet food, and performances by famous artists.
• Failure and lawsuit: The festival turned out to be a complete disaster, with inadequate facilities, poor planning, and canceled performances. Attendees were stranded on the island with minimal resources. Multiple lawsuits were filed against the organizers, including Ja Rule, for fraud and breach of contract.
• Outcome: The main organizer, Billy McFarland, was sentenced to six years in prison for fraud, and a class-action settlement was reached for the defrauded attendees. Ja Rule distanced himself from the fraudulent aspects of the festival but still faced legal challenges​.

4. Save the Kids Token (FaZe Clan Members)

• Project overview: Save the Kids Token was a crypto project that claimed to donate a portion of proceeds to children's charities. Several members of the FaZe Clan, a popular esports organization, promoted the token on social media.
• Failure and lawsuit: The project quickly collapsed after the token's value plummeted, leading to accusations that the promoters engaged in a "pump and dump" scheme. The FaZe Clan members involved were accused of misleading their followers into buying the token, only to sell their holdings at a profit before the price crashed.
• Outcome: Some FaZe Clan members were suspended or removed from the organization, and the incident led to broader discussions about the ethics of influencers promoting financial products without proper oversight​.

These examples underscore the potential risks associated with celebrity-endorsed cryptocurrency and NFT projects, particularly when the endorsements are used to promote speculative or poorly planned ventures.

Investors are often left bearing the financial losses, while celebrities face legal consequences for their involvement in these schemes.