Texas judge recommends dismissal of CryptoZoo class action against Logan Paul
The federal magistrate said investors had not tied Paul to their losses but added they should be give a chance to amend the suit.
A federal magistrate judge in Texas has recommended that the class action lawsuit brought against CryptoZoo, Logan Paul, and other organisers of the failed NFT project be dismissed, with plaintiffs being given leave to amend all but one of the 27 counts brought against him.
The 75-page recommendation, filed on August 14 in the Western District of Texas, found the plaintiffs had not adequately pleaded their claims but left open the possibility of refiling certain fraud counts with more specificity.
"If Plaintiffs can plead reliance with more specificity—that is, the who, what, when, where and how—as to Defendant Paul’s fraudulent statements, they should be allowed to do so,” the judge wrote, while concluding that the current complaint fell short of legal standards.
“Words matter, and if Plaintiffs did indeed rely on Defendant Paul’s statements to their detriment, he should be held accountable for his."
The centres around CryptoZoo, an NFT-based game Paul launched in 2021 and described as a “passion project.” The venture allowed buyers to purchase zoo tokens, exchange them for NFT eggs, and hatch digital animals.
Plaintiffs alleged Paul and associates promoted the project under false pretenses, claiming a massive development team and promising the game would make users money. About 20,000 people bought in, with the 140 named plaintiffs claiming losses ranging from $100 to $350,000.
The promised game never launched.
The court found many of Paul’s statements, such as describing CryptoZoo as “so fun” and backed by “a massive team,” amounted to non-actionable puffery.
It also determined that most plaintiffs could not show they relied on his later assurances, since nearly all had already purchased tokens before those statements were made. The recommendation allows plaintiffs the chance to amend their fraud claims with more detailed allegations.
Paul has previously denied wrongdoing, eventually announcing in 2024 that the game would not be released. He offered a buy-back program for certain NFT holders, though critics argued it excluded many investors and undervalued assets due to Ethereum’s price drop.
The district judge will now decide whether to adopt the magistrate’s recommendation.
Paul also has a second lawsuit related to CryptoZoo ongoing. In June 2024, he sued YouTuber Coffeezilla, who made a series of videos on CryptoZoo, for defamation.
