YouTuber Logan Paul’s bid to dismiss a proposed class-action lawsuit over his defunct non-fungible token (NFT) project CryptoZoo should be allowed, a Texas judge said.
Magistrate Judge Ronald Griffin advised an Austin federal court on Thursday that the class group had not sufficiently tied Paul to their claims that they lost money by buying into the CryptoZoo project.
The recommendation could see a federal judge drop the suit unless the class group updates it.
The group is made up of CryptoZoo buyers who first sued Paul and others allegedly tied to the project in February 2023, alleging it was a “rug pull” that promised perks which never materialized.
Still, Griffin said the group should be allowed to amend all but one of its 27 claims against Paul. A claim alleging Paul committed commodity pool fraud should be permanently dismissed, the judge said.
“Mental gymnastics” needed for commodity pool fraud claim
Judge Griffin said in his 75-page report that his recommendation to dismiss the lawsuit’s commodity pool fraud claim came as the court “does not follow Plaintiffs’ logic.”
The class group argued that CryptoZoo NFTs were an option contract as they started as “eggs” that “hatch” into animals, which then can be bred with others to create hybrid animals that could be traded.
An example of a CryptoZoo NFT hybrid animal that is a cross between an elephant and a shark. Source: CryptoZoo
“In other words, because purchasers buy CZ [CryptoZoo] NFTs unaware of their value until they hatch, and because the CZ NFT animals can be bred with others to create hybrid NFTs, an option contract is thereby formed,” Judge Griffin wrote.
“The mental gymnastics required to come to this conclusion are truly dizzying,” he added. “Plaintiffs do not explain — nor can the Court understand — how their purchases of CZ NFTs create option contracts or contracts for future delivery.”
Other claims fail to tie in Paul
Judge Griffin said that the lawsuit failed to properly connect Paul to the 26 other claims made…
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