Logan Paul is embroiled in a $4.2 million lawsuit that alleges that he misled fans into investing in a cryptocurrency promotion that he directly profited from.
The class-action lawsuit, which represents 130 investors, involves CryptoZoo, Paul's crypto venture marketed as an online trading card game, according to the BBC. In the game, users buy a cryptocurrency called Zoo Token, which can be used to buy non-fungible tokens (NFTs) "eggs."
The eggs eventually hatch into NFT "animals" which Paul's team claimed would make participants passive income.
"It's a really fun game that makes you money," Paul told his audience before its September 2021 launch.
According to Tom Kherkher, the lawyer representing the investors, Paul committed a form of insider trading when he and his team were allowed to buy Zoo Tokens at a low price before going public.
"The team appeared to agree that they can begin selling once the total value of all the Zoo Token in circulation hits $200 million [£157m]," Kherkher said an in interview to the BBC.
"If you had that document with that exact verbiage issued by a CEO of a publicly traded company, they would be charged with fraud in two seconds. That is insider trading."
CryptoZoo made $18.5 million from users and investors. Paul promised a refund for parties who bought NFT eggs, but only if they agreed to not sue him.
The BBC report uncovered evidence suggesting that Paul has a history of promoting crypto investments to his online audience without disclosing his financial stake in the projects.
For example, Paul promoted meme coins like Elongate and Dink Doink, causing their values to surge, before crashing. Through his social clout, he leverages his influence or brand recognition, which leads to price spikes that likely benefit him.
Paul has denied any wrongdoings despite the BBC investigation revealing that anonymous crypto wallets, one made a $120,000 profit, are linked to him, and he profited from these spikes.
Last year, Paul threatened to sue influencer, Coffeezilla, for alleging that Crypto Zoo was a "scam" in a three-part series video featured on his YouTube channel.
Paul is the brother of Jake Paul, the YouTube personality who fought boxing icon Mike Tyson and won in a livestream on Netflix that was watched by over 108 million viewers.A
Florida man filed a class-action lawsuit against Netflix over streaming issues which made the fight difficult to watch, reported Law360.
