Famed internet personality Logan Paul and NFT project CryptoZoo have been accused of engaging in a “rug pull” in a new class-action lawsuit.

Announced in September 2021, CryptoZoo was marketed as an NFT-based game and billed as “an autonomous ecosystem” that would enable virtual ZooKeepers to buy, sell, and trade exotic animals on the blockchain, hatching them from eggs at the time of purchase.

A filing made in the District Court of the Western District of Texas alleged that the defendants “executed a ‘rug pull’,” promoting CryptoZoo’s products using Paul’s online following “to consumers unfamiliar with digital currency products, leading to tens of thousands of people” purchasing these.

A “rug pull” is a colloquial way of describing instances when a crypto developer raises funds, for example, for a new token or NFT line, promising certain benefits to consumers, but then the developers abandon the project and fail to deliver the promised benefits, while fraudulently retaining the buyers’ funds.

Per the accusations, the defendants allegedly marketed CryptoZoo NFTs to purchasers, claiming they would receive benefits, rewards, and exclusive access to “other cryptocurrency assets at a later date”, as well as the support of an online ecosystem to use and market these NFTs.

The filing then claimed that “unbeknownst to the customers, the game did not work or never existed, and Defendants manipulated the digital currency market for Zoo Tokens to their advantage.”

In addition, the filing alleged that soon after completing the sale of all their NFTs, the defendants then transferred the money to wallets controlled by the defendants.

Logan Paul and CryptoZoo

Paul, 27, currently has over 23 million subscribers on his YouTube channel, making him one of the platform’s biggest stars.

The list of other defendants include Paul’s assistant Danielle Strobel, Jeffrey Levin, his manager, Eduardo Ibanez, the lead developer of CryptoZoo, Jake Greenbaum, one of the founders of CryptoZoo, and Ophir Bentov and Ben Roth.

The lawsuit comes as Paul has begun to take some accountability for recouping the losses made by investors in CryptoZoo.

The online star took to Twitter last week to announce a $1.3 million rewards program for disappointed players, also apologizing to well-known crypto YouTuber CoffeeZilla, who had posted a number of videos criticizing Paul for his involvement in the CryptoZoo situation.

It’s not the first time that seen mainstream celebrities come under scrutiny for their involvement in promoting NFT projects.

In August 2022, US consumer watchdog group Truth in Advertising (TINA) put seventeen high-profile celebrities on notice for allegedly promoting NFTs without appropriate disclosures.

Those named included Gwyneth Paltrow, Eva Longoria, Floyd Mayweather, Tom Brady, DJ Khaled, Snoop Dogg, and Paris Hilton.