CryptoZoo class-action lawsuit alleges the company ran an NFT fraud scheme
CryptoZoo Scam Class Action Lawsuit Overview:
- WHO: A police officer who bought digital currency from CryptoZoo is suing the company and its executives.
- Why: The plaintiff says he and thousands of others bought tokens to use in a CryptoZoo game that never existed in an illegal “rug pull” scheme orchestrated by company executives.
- Where: The CryptoZoo scam class action lawsuit was filed in federal court in Texas.
A Texas police officer who bought digital currency from CryptoZoo is suing the company and its executives, saying they ran an illegal “rug pull” scheme in which they lured thousands of customers into buying tokens for a game they never got to play.
Plaintiff Don Holland filed the class-action lawsuit against CryptoZoo Inc., Logan Paul, Danielle Strobel, Jeffrey Levin, Eddie Ibanez, Jake Greenbaum — also known as Crypto King — and Ben Roth on Feb. 2 in federal court in Texas, alleging violations of state . and federal consumer laws.
CryptoZoo is a Delaware company that sold digital currency called Zoo Tokens, which it said could be used to buy CryptoZoo Non-Fungible Tokens (CZ NFTs) for use in its online game CryptoZoo. NFTs are a form of digital assets that can be bought, sold and transferred on the Binance blockchain.
According to Holland’s lawsuit, CryptoZoo marketed its NFTs to consumers unfamiliar with digital currency products, leading to tens of thousands of people purchasing them to use in the CryptoZoo game.
“Unbeknownst to the customers, the game did not work or never existed, and the defendants manipulated the digital currency market for Zoo Tokens to their advantage,” Holland alleges.
CryptoZoo did a “rug pull” on customers, the lawsuit alleges
CryptoZoo and its executives performed a “rug pull” on unwitting consumers; a term used to describe a scheme in which an NFT developer solicits funds from potential NFT buyers and promises them certain benefits, the lawsuit says.
“Once the buyers’ funds are used to purchase the NFTs, the developers abruptly abandon the project and fail to deliver the promised benefits, while fraudulently retaining the buyers’ funds.”
As part of the scheme, the company allegedly told buyers that they would receive benefits including rewards, exclusive access to other cryptocurrency assets and support from an online ecosystem to use and market CZ NFTs.
“In reality, shortly after completing the sale of all of their CZ NFTs, Defendants, along with others, transferred millions of dollars worth of buyers’ cryptocurrency to, among other things, wallets controlled by Defendants.”
The promised CryptoZoo “game” was never delivered to consumers, the lawsuit alleges.
As a result, Holland is seeking to represent anyone who purchased Zoo tokens and/or CryptoZoo NFTs while in Texas. He is suing for fraud, breach of contract, unjust enrichment and negligence and is seeking damages, fees and costs.
Meanwhile, in January, Genesis Global Capital and Gemini Trust Co. struck by one class action alleging that they violated federal securities laws by engaging in an unregistered offer and sale of securities.
What do you think about the claims against CryptoZoo? Let us know in the comments!
The plaintiff is represented by Ellzey & Associates PLLC and attorney Tom & Associates.
The CryptoZoo Class Action Lawsuit is Don Holland et al., v. CryptoZoo Inc.Case No. 1:23-cv-00110 in the US District Court for the Western District of Texas.
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