One of the last things I did in 2023 was round-up the year’s crypto fails, during which I checked-in on an old favourite. In late 2021 mega-influencer Logan Paul, now probably best-known for the PRIME energy drink range and his burgeoning WWE career, began promoting a blockchain project called CryptoZoo, a videogame where players would buy NFT eggs, hatch them into animals, breed them, trade them, and so on.
The egg NFTs went on sale in September 2021 and sold out instantly, but the game as promised would never appear. As time rumbled on and Paul’s attention seemed to be elsewhere, the project looked abandoned, and dogged investigation by, among others, the internet detective Coffeezilla began to suggest that CryptoZoo was a scam, taking advantage of Paul’s fame and fanbase to hawk worthless assets.
At the time Paul threatened to sue Coffeezilla for the word “scam” before backing down, apologizing, and several months later announcing he would buy back the NFTs from CryptoZoo investors. I noted in the year’s roundup that things had since gone quiet and the buyback probably wasn’t going to happen.
Well, I owe the WWE US Champion an apology. Logan Paul has now announced across his social channels that “I am delivering on my promise to buy back Base Egg and Base Animal CryptoZoo NFTs for their original purchase price.” Let’s just take a moment to appreciate the faintly farcical phrase “egg buyback”.
In a lengthy post Paul claims “the best possible intentions” and that “I never made a single penny from the project, period.” He claims this buyback program involves $2.3 million of his own money, before going on to make some eyebrow-raising accusations about the project.
“CryptoZoo was derailed by bad actors,” says Paul. “Bad actors who DID steal money and who betrayed our team while internally sabotaging the game. This has now been confirmed by an extensive investigation that has involved a forensic analysis of blockchain activity and the review of thousands of communications.”
Paul has filed a counter-claim against two of his fellow defendants in an existing class action suit against CryptoZoo, and includes a link to the filing. He says the lawsuit is based on the above investigation as well as all internal communications and trading activity, and it takes aim specifically at two co-founders on the project, Eduardo Ibanez and Jake Greenbaum.
CryptoNoooo
“Wait until we successfully launch our eggs and I explain this fucking surgical maneuver we pulled off to remove the snake from the grass it is fucking legendary.”
Logan Paul
Paul meet Greenbaum through an interest in Pokemon cards, and soon learned that this guy not only collected cards but nicknames: “because of his supposed expertise in [blockchain & NFT] areas, Mr. Greenbaum was known in other circles not as the Collectibles Guru, but as the ‘Crypto King.’”
The long-and-short of Paul’s argument is that he relied on Ibanez and Greenbaum to actually build CryptoZoo and deliver on the promises, while Paul’s role was mainly in “high level” ideas and promoting the thing. One striking example of the situation relates to CryptoZoo’s so-called liquidity pool (essentially a decentralised mini-exchange for trading specific types of crypto), which in the weeks leading up to the “Zoo Day” launch Paul seems to have no understanding of. Paul wrote to his fellow founders in May 2023: “Who’s in charge of the liquidity/token pool blah blah blah like idk how any of that shit works.”
The filing claims that Paul’s fellow founders kept trying to rush development “in order to take advantage of what they perceived as a thriving but mercurial NFT market—a market that Mr. Greenbaum at one point described as a ‘house of cards.’” Now that’s an NFT developer being honest about their NFT game.
Paul duly played his part in announcing and promoting CryptoZoo across his channels, and the price of ZOO Tokens “skyrocketed.” As this happened, ZOO Tokens began to be sold from certain wallets in such high volumes that these wallets “could only have been held by one of the founders.” The lawsuit states: “Mr. Paul was incensed by this and told his co-founders, ‘Your tokens do not leave your wallet. This is a game not a shitcoin and as of now the coin went up because I said something about it so when someone else is capitalizing on it and jeopardizing the integrity of a very honest and legitimate project, who do you think takes the blame publicly?’”
Paul suspected Greenbaum especially and his distrust led to an internal rug pull: Paul launched a new ZOO Token that replaced the old one 1:1 and at the same time blacklisted wallets associated with Greenbaum. He resolved that Greenbaum needed to be removed from the project, and sent the following email to his fellow founders: “The game is beyond him. Wait until we successfully launch our eggs and I explain this fucking surgical maneuver we pulled off to remove the snake from the grass it is fucking legendary.”
But things elsewhere were going wrong. The game’s lead developer began trying to hold the code hostage and demanded $1 million for its return. Ibanez tells Paul the developer has “went rouge [sic]”. Perhaps Ibanez should have suspected this, however, as it turns out he had “inexplicably hired as his lead developer a rumored former felon who previously had been incarcerated for armed robbery and who, even before stealing the code, had been badmouthing Mr. Paul and the very project he was tasked with building in online forums.”
A few months later, Ibanez is exposed by an article that details “a lifetime of deception. It turned out that Mr. Ibanez’s entire backstory was a fabrication, including the credentials that had caused Mr. Paul to entrust the project to him in the first place. Not only had Mr. Ibanez never attended MIT or worked for NFL teams, but he also had misrepresented a variety of other accomplishments and skillsets.” Among these fabrications were that he owned an Eagles Superbowl ring and helped the CIA hunt terrorists.
Class Act?
“As far as the game itself, unfortunately it will not be released.”
Logan Paul
The upshot is Paul claims the project did not just fail but was “sabotaged” by the actions of these two co-founders, and his considerable fame was used to promote what seems basically an elaborate pump n’ dump scheme “and thereby line their own pockets at Mr. Paul’s expense.”
Paul’s seeking compensatory damages, punitive damages, all his costs, and basically anything else he can get. Which is probably the point at which to emphasise that all the above is Paul’s version of events as fine-tuned through the lens of expensive lawyers. The filing casts Paul as a somewhat starry eyed victim of the scheme himself, and someone who attempted to do the right thing when he realised what was going on.
To return to the buyback scheme itself, there’s a limited timeframe alongside the usual legalese you’d expect which, conveniently enough, stops anyone claiming the buyback from taking part in the class action:
“You are waiving any actual or anticipated claims against [Logan Paul],” the buyback page fine print states, and the buyback scheme “does not constitute an admission by [Paul] of your legal entitlement to any amount, nor does it constitute an admission of any responsibility in connection” to the various CryptoZoo shenanigans. But given Paul is the one actually ponying up the dough here, while his co-accused have for now gotten away with things, that doesn’t seem wildly unreasonable.
Those who bought base egg NFTs and base animal NFTs can now fill in the claim form, which has to be done before February 8, 2024, after which all claims will be processed and those eligible will receive 0.1 ETH per eligible NFT (the current value of this is roughly $240). Due to a fall in the value of Ethereum this is a loss of just over a third in value from what people would have paid at the time, though it feels unfair to blame Paul for that. Curiously enough the Hybrid animal NFTs, which were kinda the point of the game-as-conceived, are not eligible for the buyback, with no reason given.
There’s clearly more entertainment to come from CryptoZoo yet, though not in the manner once intended: “As far as the game itself, unfortunately it will not be released,” says Paul. “This buy-back is a way for me to make whole those who intended to play CryptoZoo. The buy-back is not intended to compensate those who gambled on the crypto market and lost. It’s important to remember that the Zoo Token was created to support the CryptoZoo game and its players; it was ‘not intended as an investment vehicle,’ as outlined in the original WhitePaper.”
That’s a curious clarification at the end, isn’t it? Paul described CryptoZoo from the start as a “really fun game that makes you money”. All of these projects are sold on the promise of returns for doing nothing, and that’s why they attract victims. Ever the P.T. Barnum, Paul can’t resist trying to put a positive spin on this as “the first ever NFT buy-back”, but you wouldn’t be surprised if this menagerie of villains and animal jpgs has more wild firsts to come.
www.pcgamer.com