The US federal magistrate judge has declined Logan Paul’s request for default judgment against his former CryptoZoo business partners, Eduardo Ibanez and Jake Greenbaum.
Paul, who is suing the duo for allegedly masterminding a multimillion-dollar NFT fraud, argued that his co-founders failed to respond to his lawsuit and thus must be held liable by default.
However, the court rejected this motion, stating that although the parties were mute, the case should proceed through the legal process.
The ruling is a setback for Paul’s legal strategy and only further undermines accountability in the failed CryptoZoo project.
The Lawsuit: Paul Claims He Was Misled
In his case, Logan Paul claims that Ibanez and Greenbaum, also known in the crypto world as the “Crypto King”, misled him into becoming the face of now-bankrupt NFT-gaming project CryptoZoo.
Paul, a social media influencer with a huge following, accuses the duo of misrepresenting multiple key aspects of the project’s development, funding, and overall viability.
As can be observed in court documents, Paul was told that the project was operating efficiently and smoothly, whereas it was plagued with inner dysfunction.
He now accuses his former partners of operating a “rug pull” scam in which insiders exit a project after profiting from initial investor zeal.
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The Rise and Fall of CryptoZoo
CryptoZoo launched in 2021 as a blockchain game in which players could buy and hatch cute NFT “eggs” into unusual animals, breeding up rare beasts and earning crypto prizes.
Promoted aggressively on Paul’s social media and podcast, the game attracted thousands of investors who believed in its long-term prospects.
Even Paul claimed to have invested $1 million of his own cash into its development.
However, when the game was released late in 2021, gamers discovered that the NFTs were just run-of-the-mill stock pictures and the site didn’t have a functional rewards system.
Large builders claimed they were not paid, and insiders allegedly profited millions by flipping tokens, while the average investor was left holding nothing.
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The Coffeezilla Investigation and Fallout
Public backlash against CryptoZoo intensified after YouTube investigator Coffeezilla released a viral three-part series in December 2022.
The series implicated Logan Paul and his crew of defrauding their viewers as insiders made profit.
The revelation of the matter outraged investors and also tainted Paul’s reputation in the crypto world.
Although Paul has attempted to disassociate himself from the debacle, stating that his colleagues misled him, many critics argue that he is largely at fault for his open endorsement of the project.
The lawsuit appears to be part of a bigger effort by Paul to rebuild his image and deflect blame on his former colleagues.
Also Read: Investigation Links Crypto Influencer ‘Crypto Beast’ To $ALT Pump And Dump Of $11M
Broader Legal Context of U.S. Crypto Regulation
The CryptoZoo case unfolds in the context of a broader crackdown by U.S. courts on bogus crypto schemes.
In February 2025, Brazilian nationals Emerson Pires and Flavio Gonzálves, co-founders of EmpiresX, were directed by a US federal court to pay over $130 million in fines for conducting a bogus investment scheme.
Also, few days ago, the U.S. Court of Appeal reversed a $9 Million ruling in favor of Yuga Labs against artist Ryder Ripps, deciding that the company failed to prove consumer confusion over their Bored Ape Yacht Club NFTs.
Logan Paul’s lawsuit against his CryptoZoo co-founders now joins an increasing number of well-known crypto battles that have the potential to set additional legal precedent in the Web3 and NFT universe.
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