US judge says Logan Paul can’t escape CryptoZoo lawsuit by shifting blame

YouTuber and WWE star Logan Paul may not be able to shift blame onto his co-founders in the CryptoZoo lawsuit, according to a US judge.

Paul’s request to seek a default judgment against his fellow CryptoZoo co-founders should be denied, as advised by Magistrate Judge Ronald Griffin, who believes doing so could lead to inconsistent court rulings and hinder the broader case brought by NFT buyers.

In a July 23 court filing in Austin, Texas, Judge Griffin urged the federal court to reject Paul’s bid for default rulings against Eduardo Ibanez and Jake Greenbaum.

The two have not responded to the lawsuit or appeared in court, but Griffin said granting the judgment in their absence would unfairly isolate them from the joint fraud allegations.

Griffin noted that allowing Paul’s motion would risk producing conflicting outcomes, especially as the claims centre around joint liability. 

“If the Court were to grant default judgment and thereby lay all blame on Ibanez and Greenbaum, what would come of Plaintiffs’ claims as to Paul and the other defendants?” the judge wrote.

He added that Paul “has not demonstrated — nor is the Court convinced — that, based on the nature of his claims, there exists any reduced risk of inconsistent judgments.”

Paul claims he was misled

Paul filed a counterclaim in January 2024, accusing Ibanez and Greenbaum of misleading him during the project’s development.

He claimed they were hired to help run CryptoZoo, but instead defrauded him and contributed to the project’s demise, which impacted thousands of investors.

The lawsuit was originally filed in early 2023 by a group of disgruntled CryptoZoo NFT buyers who alleged that Paul, along with Ibanez, Greenbaum, and other collaborators, engaged in fraudulent conduct and falsely marketed the project as a blockchain-based game that never materialised.

What was CryptoZoo?

Launched in 2021, CryptoZoo was a hyped up NFT project that promised to break out of the norm by offering users the ability to buy NFT “eggs” using the project’s native token, ZOO. 

These eggs were supposed to hatch into hybrid animals with trading features, but the game never launched, leaving buyers without the promised utility.

In the lawsuit, plaintiffs have described the venture as a “rug pull,” claiming that those behind the project misled investors, profited from hype, and failed to deliver the advertised features.

What’s next for the lawsuit?

Judge Griffin said that, fundamentally, the case calls on the court to assess whether the defendants together committed fraudulent acts. 

Treating them differently at this stage, he said, would undermine the plaintiffs’ collective allegations and disrupt the judicial process.

“The court believes defendants are similarly situated and possess closely related defenses,” Griffin noted.

As of now, the lawsuit will move forward unless the district judge overturns Magistrate Judge Griffin’s recommendation to deny Paul’s bid to shift blame onto his co-founders.

Separately, Paul is also involved in a defamation lawsuit against YouTuber Stephen Findeisen, known as Coffeezilla, over videos alleging that CryptoZoo was a scam.

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