Logan Paul’s self-proclaimed “redemption arc” came to a screeching halt early this year as internet sleuths uncovered a hidden underbelly to CryptoZoo, a cryptocurrency platform he spearheaded into popularity under his brand name. But what appeared as a simple rug-pull festered into a developer holding code private and fleeing the country, a fake orphan and alleged Super Bowl analyst duping millionaires into backing his non-existent credibility, and the project’s founders trying to out-scam each other for millions of dollars.
Disney star, turned Vine star, turned YouTube star, turned WWE star, turned energy drink entrepreneur Logan Paul is no stranger to controversy (see Wikipedia) but his first foray into finance faces fierce fan backfire… and also a class action lawsuit in the Western District of Texas .
He revealed the project on his podcast “Impaulsive” in August 2021, heralding it as “a really fun game that makes you money” .
The idea was simple:
- You buy the crypto token $ZOO.
- With the token, you buy and hatch egg NFTs of different “hand-drawn” animals.
- You then breed these animals with one another, creating hybrid animal NFTs of different rarities, with higher rarities generating a higher passive yield of $ZOO. These NFTs would be the work of 10 artists stylising every possible permutation of animal-hybrids over 6 months.
- You then burn the NFTs for $ZOO, letting you cash out or reinvest in more eggs.
Backed by the integrity of one of the internet’s biggest superstars, reported years of development and more than $1 million out of pocket investment from Logan, it’s hard to see how this couldn’t have possibly taken off – but I don’t think anyone expected it to soar as high as it did. Before the game even launched, players fed the project $2.5 million USD and the crypto token climbed to a market cap of $2 billion by launch day .
As the 3rd of November 2021 rolled around, players held their breath, anticipating the launch of one of the largest and easy to access crypto platforms ever…
But immediately, things appeared… off. The promoted “hand-drawn” animals were, in fact, not very hand-drawn at all. They were abominable AI amalgamations of adobe stock photos that looked like they belonged in A Quiet Place far more than a zoo.
More importantly however, the “passive income” element of the NFTs did not work. The yields your animals were supposed to generate were caged away; entirely inaccessible then and they remain so now. Additionally, those who purchased eggs with Ethereum, the most-popular cryptocurrency in the world which comprised more than 50% of egg purchases, were entirely unable to hatch their eggs, meaning they effectively spent money on nothing.Unsurprisingly, the market did not take well to the advertised “really fun game that makes you money.”. The price of $ZOO fell 64% in less than 24 hours and the entire CryptoZoo team went into hibernation, drowning out the roars and hisses of the public.After more than a month of radio silence and starved investors clawing through the bars trying to get the attention of the CyptoZoo team, Logan Paul announced he was really excited for a new “passion project [he’d] poured [his] life into”. Naïve investors thought that this was surely a relaunch of CryptoZoo, a chance to fix the game and its mechanics and deliver on his promises and the millions of dollars’ worth of backers’ moneys.I’m sure you can see where this is going.The announcement was a new NFT project “#99Originals”, a collection of polaroids taken by Logan and sold on the blockchain to the highest bidder.
Thankfully, the ridiculous timing of this announcement, coupled with a month of boiling anger from robbed investors, made the backlash a little more than what Logan could hide from.
Finally crawling out of his enclosure, Logan proclaimed that the shoddy launch of the game could be attributed to a series of “bad actors”. The quickly mashed-together spaghetti-code of the game could be traced to one of the team’s lead developers, who allegedly took the game’s real code hostage and fled the United States to Switzerland .
Incredibly surprisingly, what Logan said was (partially) true. In an interview with Stephen Findeison, the accused developer revealed that he made his code private was because he, and the team he hired, had not been paid as much as a peanut for their work. Prior to taking the job, they verbally discussed a fee of $1 million with one of CryptoZoo’s founders. However, with no contracts signed, Logan and his team were (legally) clear. Nonetheless, many were quick to point out Logan’s hypocrisy in stealing the developers’ work while he himself was threatening to sue Floyd Mayweather for not paying him for their boxing match.
The founder who promised the developers $1 million (and 5% of the total Zoo tokens) was someone named Eddie Ibanez, and this is where to story becomes truly bizarre. Eddie is an MIT graduate who was recruited by the CIA and developed software to track down terrorists using burner phones. After he left the government agency, he used his analyst background to help the Philadelphia Eagles win the Super Bowl in 2018.
Only, he never actually did any of those things. Billy Penn reporter Adam Robb exposed all of Eddie’s lies ranging from his alleged Super Bowl analyst role, to his work with the CIA, to the fact he lied about being an orphan (hilariously revealed on a cooking TV show where his wife cooked a dish she learned from Ibanez’ mother) .
I’m sure (like me) you’re wondering: How on Earth anyone possibly believed this? I mean, I’ve heard more believable backstories on MTV’s Catfish. And yet, he had such an ability to convince people of his persona that he ended up presenting on a panel hosted by the owner of the New York Yankees on how he modelled NFL-players as Street Fighter characters in order to win the Super Bowl.
Back to CryptoZoo, Eddie’s lies and fake experiences garnered him relationships with various multimillionaires who vouched for his credibility as he applied to be a part of CryptoZoo. Robb had confronted Jeff Levin, Logan’s manager, with the fact that the NFL had said they had no relationship with Eddie, but Levin said his business relationships made him more than trustworthy.
It was Eddie who had hired and stubbornly not paid the development team, dooming the project’s launch to crash and burn. While he is certainly at fault for CryptoZoo’s disastrous take-off, a series of leaks from the internal development team revealed a sinister underbelly to the entire project’s conception.
This is where the final co-founder, Jake “CryptoKing” Greenbaum enters the story.
He headed the idea of a “stealth launch” of $ZOO in July 2021. This gave the CryptoZoo team the opportunity to buy out the liquidity pool at a steep discount prior to the game’s announcement in August, and let their wallets appreciate when the game formally launched. While pre-sales are subject to legal scrutiny by the SEC, buying from the liquidity pool in a “stealth launch” avoids many legal hurdles as a workaround.
While Logan and Eddie held to their agreed $100k investment, Jake sneakily invested far more across multiple wallets, tanking the coin’s market cap to $40 million after it had reached $120 million a few hours earlier .
Logan suspected Jake of breaching their agreed investments, and when the token formally launched in September, he minted a new coin also titled $ZOO. An equal amount of this new $ZOO was deposited into the accounts of those involved in the stealth launch, except for those owned by Jake. This essentially froze Jake’s wallets as only the new $ZOO was initially being traded publicly.
In a comical moment of childish irony, Jake labelled Logan a “scam artist” and a “liar” and begun to leak the project’s details to various reporters.
To top it off, in a leaked document, the founders discussed rules for selling locked up tokens (that were meant to pay for development) in ways that would not disrupt the market. This sparked legal investigation of the project as this is textbook market manipulation, bringing us back to today.
It’s very easy to sit back and laugh at the poetic fact CryptoZoo failed because a bunch of scammers scammed each other in a scam battle royale, but it’s also important to recognise the repercussions of the project.
Prominent victims who bought into the game lost between $50k-$500k individually. While it’s easy to laugh these off as insane, ill-advised investments that never should have been made, it was their para-social trust in Logan’s brand that was taken advantage of. Ibanez and Jake (after he recovered his frozen tokens) made off with $1.7m and $6m respectively. It’s hard to exactly determine what Logan made, but estimates are around $1.36m.
In terms of blame, it’s difficult to pin it down to just one person. Logan promoted a product he never delivered and then swept it under the rug, but Eddie was responsible for not paying the development team, ultimately dooming the game. Moreover, Jake formulated the ideas underpinning the scam itself and likely profited the most. Like Findeison put it, “It’s like Avengers Assemble for the worst possible team you can imagine”.
In February, after going back and forth with Findeison and retracting a defamation lawsuit threat, Logan stated that he intends to refund $1.7 million to NFT investors (entirely ignoring those who invested in the manipulated $ZOO token) and restore the game to a functioning state. Almost two months later, there’s been no follow-up on these promises.
Unfortunately, the internet has a very short-term memory, so I’ve no doubt Logan’s next spring-board clothesline in Royal Rumble will wipe everyone’s minds Men in Black style, but if a similar situation ever arises, I implore you to keep your money out of the lion’s den.
Moreno, M. (2023, February 16). Logan Paul, five other sued over involvement in cryptocurrency and NFT platform CryptoZoo. Retrieved from WFAA: https://www.wfaa.com/article/money/logan-paul-texas-class-action-lawsuit-alleged-cryptozoo-scam-nft-cryptocurrency/287-7aa67ac5-83bb-440f-90e9-fd5230b02545
Paul, L. (2021, August 18). Our First Episode In Puerto Rico – IMPAULSIVE EP. 287. Retrieved from https://www.youtube.com/watch?v=1sAgvo7VwqY&ab_channel=IMPAULSIVE
Haylock, Z. (2023, January 6). Logan Paul SBF’d Up. Retrieved from Vulture: https://www.vulture.com/2023/01/logan-paul-cryptozoo-scam-coffeezilla-allegations-explained.html
L, P. (2023, January 4). Logan Paul threatens to sue Coffeezilla after firing back at YouTuber over CryptoZoo scam. Retrieved from Finbold: https://finbold.com/logan-paul-threatens-to-sue-coffeezilla-after-firing-back-at-youtuber-over-cryptozoo-scam/#:~:text=Criminal%20elements%20working%20on%20CryptoZoo&text=In%20substantiating%20the%20criminal%20element,it%20hostage%2C%20for%20%241%20millio
Robb, A. (2022, February 14). Philly-born tech founder who falsely claimed he had an Eagles Super Bowl ring and helped the CIA hunt terrorists got $1.5 million in PPP loans as his company went up in flames. Retrieved from Billy Penn: https://billypenn.com/2022/02/14/eddie-ibanez-zenabi-eagles-dolphins-logan-paul/
Krawanski, F. (2022, December 24). Logan Paul promises to expose CryptoZoo “bad actors” on January 3rd. Retrieved from Dexerto: https://www.dexerto.com/entertainment/logan-paul-promises-to-expose-cryptozoo-bad-actors-on-january-3rd-2018000/