YouTuber Logan Paul has requested to dismiss the class action lawsuit against his now-defunct non-fungible token (NFT) project CryptoZoo, receiving support from a Texas district judge.
District Judge Ronald Griffin suggested on Thursday to the Austin federal court that the plaintiff class failed to sufficiently demonstrate a specific connection between Paul and their claims of losses incurred from purchasing the CryptoZoo project.
This suggestion could lead to the federal judge dismissing the lawsuit unless the plaintiff class amends the complaint.
In February 2023, a class of CryptoZoo buyers first filed a lawsuit against Paul and other project-related individuals, accusing the project of "running away with funds" and promising unfulfilled benefits.
However, Griffin stated that the plaintiff class could amend all claims except for one of the 27 requests against Paul, while the claim accusing Paul of commodity pool fraud would be permanently dismissed.
In his 75-page report, Judge Griffin noted that the recommendation to dismiss the commodity pool fraud claim was due to the court's difficulty in accepting the plaintiffs' logic.
The plaintiffs argued that CryptoZoo NFTs were a type of option contract because they initially started as "eggs," which hatched into animals that could breed with other animals to create tradable hybrid animals.
"In other words, buyers did not know the value of the CZ, i.e., CryptoZoo NFT, at the time of purchase until it hatched, and the CZ NFT animals could breed to generate hybrid NFTs, thus constituting an option contract," Judge Griffin wrote.
"This reasoning is perplexing," he added. "The plaintiffs have neither explained—nor can the court understand—how their purchase of CZ NFTs constitutes an option contract or a forward contract."
Judge Griffin stated that the lawsuit failed to effectively link Paul to the remaining 26 claims, asserting that the plaintiffs had not demonstrated that he directly benefited from the collapse of CryptoZoo.
The lawsuit involves claims of fraud, unjust enrichment, negligence, breach of contract, fraud conspiracy, aiding or abetting fraud, and violations of multiple state consumer laws.
Judge Griffin pointed out that some complaints provided only scattered facts and ambiguously attributed actions to the "defendant." Other complaints attempted to piece together unrelated facts to reach a complete conclusion.
"Unfortunately, relevant case law does not support this approach."
The plaintiff class filed a lawsuit against Paul and CryptoZoo co-founders Eduardo Ibanez and Jake Greenbaum in 2021. In January 2024, Paul claimed that the two deceived him, leading to the collapse of the CryptoZoo project. Judge Griffin recommended in July that the court dismiss the related claims.
In January 2023, Paul promised to devise a plan for CryptoZoo and reserved $2.3 million a year later for refunds to CryptoZoo buyers, provided that the claimants agreed not to file further lawsuits regarding the project.
Buyers returned 0.1 Ethereum (ETH), which was consistent with the original sale price of the CryptoZoo NFTs in 2021.
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Original article: “CryptoZoo Lawsuit Takes Turn: Texas Judge Supports Logan Paul’s Dismissal Request”
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