In August 2021, social media influencer and YouTuber Logan Paul introduced the launch of his new cryptocurrency undertaking, CryptoZoo. Followers of Paul and different buyers spent tens of millions on the undertaking, solely to discover a dysfunctional recreation on launch day. Due to an explosive investigation by YouTuber CoffeeZilla, who makes a speciality of uncovering crypto scams, the quite a few Logan Paul crypto initiatives have been met with widespread controversy and criticism from the cryptocurrency group.
Who’s Logan Paul?
Logan Paul is a well-liked social media influencer with over 23 million subscribers on YouTube. Apart from making movies, he’s a podcaster, boxer, {and professional} WWE-signed wrestler. Paul has been concerned in varied controversial incidents up to now, together with a extremely publicized incident in 2017 the place he filmed and posted a video of a physique in Japan’s “suicide forest” (1).
Since then, he has rebuilt his fanbase to develop into one of many highest-paid creators on the platform and the poster youngster for the creator economic system. A person of many pursuits, Logan Paul has ventured into the NFT group, typically speaking about his personal initiatives.
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What’s CryptoZoo?
The most recent addition to the record of Logan Paul crypto initiatives was CryptoZoo. Paul launched CryptoZoo on his podcast “Impaulsive”. He described the undertaking as a “actually enjoyable recreation that makes you cash.” Traders would begin by shopping for the in-game foreign money known as ZOO tokens. With these cash, gamers purchase egg NFTs, which may hatch into animals (4).
The attraction of the sport was having the ability to breed the animals into distinctive hybrids. The rarer your NFT, the extra ZOO cash you would earn, which you would both money out or reinvest into eggs. Earlier than the sport’s launch, buyers already spent tens of millions of {dollars} on eggs and the ZOO tokens as a consequence of Paul’s advertising and marketing (4).
CoffeeZilla’s deep-dive investigation into this Logan Paul crypto scandal could be summarized in 4 elements.
1. Dysfunctional Sport
After launch day, the sport merely didn’t work, and the worth of the zoo token plummeted inside 24 hours. Much more, the guarantees of “handmade artwork” NFTs revealed themselves to be inventory photos. Traders collectively misplaced tens of millions (6).
Paul attributed the defective recreation to his builders, who ran off with the sport code. Nonetheless, upon investigation, the builders defined that they had been by no means paid for his or her work regardless that Paul claimed his group invested one million {dollars} in improvement (6).
2. Questionable Practices
Leaked textual content messages among the many CryptoZoo group confirmed that the group was primarily involved about making the utmost amount of cash from the undertaking. As an alternative of doing a presale, which might topic CryptoZoo to SEC laws, they’d do a stealth token launch, permitting the group and their associates to purchase out the tokens at a reduced price, elevating the valuation (8).
With these tokens, Paul’s group imparted guidelines concerning once they might promote and to not influence the market inside a sure share. Whereas Logan Paul ultimately went again on his guidelines and inspired the opposite members to carry their cash, not everybody did (8).
3. Untrustworthy Crew Dynamics
Eddie Ibanez, one among Logan’s CryptoZoo group members, claimed to be an MIT graduate, former CIA/protection division worker, and an information scientist who helped the Philadelphia Eagles win the Superbowl. Adam Rob, one other investigative journalist, found that the entire statements, and extra, had been fully false. Though Rob knowledgeable Paul’s supervisor, Jeff Levin, of Eddie’s previous, Eddie remained part of their group and was put in control of overseeing the sport builders and securing buyers (7).
One other member of the group was Jake the Crypto King. He labored with Paul up to now and was the principle man behind the Logan Paul crypto stealth presale concept. Each Eddie and Jake bought their cash on launch day earlier than the worth drop, making tens of millions of {dollars} every (8).
4. Lack of transparency and accountability
As an alternative of coming clear about their struggles, Paul’s group went radio silent for a yr with solely obscure guarantees to repair the sport. This led to some buyers dropping much more cash, as they held their cash, satisfied that Paul would comply with up with fixing the sport. Moreover, after CoffeeZilla’s explosive exposé got here out, Paul defended CryptoZoo, denied any wrongdoing, and threatened to sue CoffeeZilla for his phrases (2).
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The Penalties
Whereas he has apologized to CoffeeZilla, come forth with a 1.3 million greenback refund plan to buyers, and promised to ship a practical CryptoZoo sooner or later, Logan Paul has not been absolved of duty.
- Class-action Lawsuit: Traders have filed a class-action lawsuit in opposition to Logan Paul. They claimed that CryptoZoo was a “rug pull,” a rip-off the place NFT builders abandon a undertaking after taking buyers’ cash.
- Destructive influence on Logan Paul’s repute: The CryptoZoo scandal had a large influence on Logan Paul’s repute, with many followers and followers distancing themselves from him. There are doubts about whether or not Paul will ship on his new CryptoZoo guarantees, as CoffeeZilla states that 1.3 million {dollars} isn’t sufficient to refund all buyers (5).
- Unfavorable perspective in direction of the crypto market: The controversy surrounding the Logan Paul crypto initiatives highlighted the dangers and potential scams related to rising cryptocurrencies and NFT initiatives. This end result might have contributed to a damaging notion of influencers, their initiatives, and the cryptocurrency market as an entire.
1. Transparency is vital
Like another firm, transparency with regard to undertaking timelines, follow-ups, and accountability is a should for crypto initiatives to succeed. Since crypto is a decentralized trade and crypto scams are giving {the marketplace} a nasty rap, belief and transparency are particularly vital.
For CryptoZoo, Paul would have vastly benefited from holding his buyers up to date with a tentative timeline to stop confusion and outrage. Although some could also be tempted to comb issues below the rug to keep away from dangerous information, from a enterprise standpoint, it’s at all times higher, in the long term, to be upfront with faults and setbacks to cushion your repute.
For instance, when KFC ran out of hen, they ran an apology that not solely conveyed their sincerity but in addition gave audiences an ideal snicker, spinning a nasty factor into a very good contact level with customers.
By way of KFC
2. Educate your audiences
One of many main criticisms of influencer-led crypto initiatives is the notion that “clueless influencers are promoting scams to younger, impressionable youngsters.” To determine belief and authority, crypto companies and NFT undertaking house owners should participate in educating their target market.
Because the cryptocurrency trade develops, on a regular basis buyers are getting smarter and can begin asking extra questions. It’s higher to be on the forefront of change by anticipating these questions and answering them. Attempt to be a thought chief from the beginning!
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3. Preserve the very best ethics
After all, one of the best ways to keep away from a scandal is to stop it within the first place. Some early adopters have checked out NFTs and cash as making a fast buck, with little regard for the individuals they have an effect on. Nonetheless, the Logan Paul crypto initiatives taught us to imagine {that a} third celebration can be monitoring your exercise and initiatives.
For influencers and companies alike, belief is essentially the most precious foreign money. Due diligence will not be solely advisable however obligatory. The CryptoZoo scandal underscored the dangers of overpromising, under-delivering, and surfacing questionable ethics. Due to the current crypto scams, individuals are changing into warier than ever about crypto initiatives run by influencers.
Logan Paul has an extended street forward of him in fixing CryptoZoo. Due to CoffeeZilla, there are extra eyes on the previous and future Logan Paul crypto endeavors than ever. Influencers selling crypto and creators of crypto initiatives should prioritize accountable habits and transparency with a purpose to construct belief and legitimacy within the eyes of followers, regulators, and buyers. Whether or not you might be an influencer or a enterprise, always remember that having belief is your largest asset!
Sources:
- https://en.wikipedia.org/wiki/Logan_Paul
- https://time.com/6252093/logan-paul-cryptozoo-liquid-marketplace/
- https://www.forbes.com/websites/abrambrown/2022/01/14/the-highest-paid-youtube-stars-mrbeast-jake-paul-and-markiplier-score-massive-paydays/?sh=79e097681aa7
- https://www.youtube.com/watch?v=386p68_lDHA&t=3s
- https://www.buzzfeednews.com/article/tomwarren/logan-paul-cryptozoo-class-action-lawsuit
- https://www.youtube.com/watch?v=HFpga3thWcE
- https://www.youtube.com/watch?v=wvzyDg40-yw
- https://www.youtube.com/watch?v=8-fugWMBwCg
