Logan Paul Faces Allegations in CryptoZoo Rug Pull After CoffeeZilla Investigation

YouTube personality and professional wrestler Logan Paul has been implicated in a class-action lawsuit alongside several associates over the failed CryptoZoo NFT project, which promised digital asset benefits but never delivered. The allegations emerged following a high-profile investigative series by YouTube journalist CoffeeZilla, who documented evidence suggesting the project was designed to defraud investors. According to court filings in the U.S. District Court for the Western District of Texas, Austin division, Paul and his co-defendants systematically promoted the initiative to cryptocurrency-naive consumers, resulting in tens of thousands of purchases that yielded nothing of value.

How the CryptoZoo Scheme Unraveled: CoffeeZilla’s Investigative Findings

CoffeeZilla’s three-part investigative series served as the catalyst for the legal action, meticulously outlining patterns consistent with fraudulent activity. The journalist’s analysis revealed critical inconsistencies between marketing promises and actual project delivery. The investigative reports documented that the game component of CryptoZoo was either non-functional or never developed despite being central to the project’s value proposition. This exposé sparked widespread public scrutiny and ultimately prompted legal action against the defendants.

Specific Fraud Allegations Against Logan Paul and Associates

Paul’s co-defendants—Danielle Strobel, Jeff Levin, Ebbie Ibanez, Jake Greenbaum (known as Crypto King on social media), and Ophir Bentov—were named alongside him. The lawsuit alleges that the group leveraged Paul’s substantial social media following to market CryptoZoo NFTs to purchasers unfamiliar with digital currency mechanisms. Court documents specify that defendants falsely claimed token holders would receive rewards, exclusive ecosystem access, and ongoing support for their digital assets in exchange for purchasing NFTs with cryptocurrency.

The Rug Pull Mechanics: False Promises and Misappropriated Funds

The lawsuit characterizes the CryptoZoo scheme as a textbook rug pull—a Web3 deception tactic where developers or promoters solicit investments through misleading claims, only to abandon the project and retain funds after launch. Court filings allege that Paul and associates transferred millions of dollars in cryptocurrency into wallets under their control, effectively misappropriating investor funds. The plaintiffs contend that the defendants knowingly failed to disclose the game’s non-functionality and material failures to consumers who relied on their endorsements and assurances.

Legal Charges and Potential Penalties

Plaintiffs allege multiple violations beyond basic fraud, including fraudulent representation, conspiracy to commit fraud, violations of Texas’s Deceptive Trade Practices Act, and unjust enrichment. The complaint emphasizes that defendants’ conduct “was attended by fraudulent, malicious, intentional, willful, wanton, or reckless conduct that evidenced a conscious disregard for Plaintiff’s rights.” Consequently, the filing seeks punitive damages to be determined at trial. The proposed class action encompasses approximately 20,000 CryptoZoo NFT token holders, representing the scale of affected investors.

Related Market Developments: Crypto Sector Under Pressure

Separately, Blockfills, a Chicago-based crypto lending platform that managed over $60 billion in 2025 trading volume, faced operational collapse when its co-founder and CEO Nicholas Hammer stepped down from his position. The platform froze deposits and withdrawals on February 11 as clients were urgently advised to withdraw assets beforehand. The firm, reportedly seeking a buyer to survive the broader market downturn, exemplifies ongoing instability within digital asset lending infrastructure—a sector already weakened by past failures and regulatory scrutiny.

The CryptoZoo litigation and parallel industry crises underscore persistent vulnerabilities in cryptocurrency markets, particularly regarding consumer protection mechanisms and accountability for high-profile promoters who endorse unvetted projects.