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 thousands and thousands on the undertaking, solely to discover a dysfunctional recreation on launch day. Due to an explosive investigation by YouTuber CoffeeZilla, who focuses on uncovering crypto scams, the quite a few Logan Paul crypto initiatives have been met with widespread controversy and criticism from the cryptocurrency neighborhood.
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 previously, 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 turn into one of many highest-paid creators on the platform and the poster little one for the creator economic system. A person of many pursuits, Logan Paul has ventured into the NFT neighborhood, 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 forex referred to as ZOO tokens. With these cash, gamers purchase egg NFTs, which may hatch into animals (4).
The attraction of the sport was with 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 thousands and thousands of {dollars} on eggs and the ZOO tokens on account of Paul’s advertising (4).
CoffeeZilla’s deep-dive investigation into this Logan Paul crypto scandal will 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 photographs. Traders collectively misplaced thousands and thousands (6).
Paul attributed the defective recreation to his builders, who ran off with the sport code. Nevertheless, upon investigation, the builders defined that they have been by no means paid for his or her work though Paul claimed his workforce invested one million {dollars} in improvement (6).
2. Questionable Practices
Leaked textual content messages among the many CryptoZoo workforce confirmed that the workforce was primarily involved about making the utmost sum of money from the undertaking. As a substitute of doing a presale, which might topic CryptoZoo to SEC laws, they might do a stealth token launch, permitting the workforce and their buddies to purchase out the tokens at a reduced price, elevating the valuation (8).
With these tokens, Paul’s workforce imparted guidelines relating to once they may promote and to not affect the market inside a sure proportion. 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, considered one of Logan’s CryptoZoo workforce members, claimed to be an MIT graduate, former CIA/protection division worker, and a knowledge scientist who helped the Philadelphia Eagles win the Superbowl. Adam Rob, one other investigative journalist, found that all the statements, and extra, have been utterly false. Though Rob knowledgeable Paul’s supervisor, Jeff Levin, of Eddie’s previous, Eddie remained part of their workforce and was put answerable for overseeing the sport builders and securing buyers (7).
One other member of the workforce was Jake the Crypto King. He labored with Paul previously and was the principle man behind the Logan Paul crypto stealth presale thought. Each Eddie and Jake bought their cash on launch day earlier than the value drop, making thousands and thousands of {dollars} every (8).
4. Lack of transparency and accountability
As a substitute of coming clear about their struggles, Paul’s workforce went radio silent for a 12 months with solely obscure guarantees to repair the sport. This led to some buyers shedding 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 useful 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.
- Unfavorable affect on Logan Paul’s repute: The CryptoZoo scandal had a large affect 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 the 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 final result could have contributed to a unfavorable notion of influencers, their initiatives, and the cryptocurrency market as a complete.
1. Transparency is essential
Like every other firm, transparency with regard to undertaking timelines, follow-ups, and accountability is a should for crypto initiatives to succeed. Since crypto is a decentralized business and crypto scams are giving {the marketplace} a foul rap, belief and transparency are particularly essential.
For CryptoZoo, Paul would have drastically benefited from retaining his buyers up to date with a tentative timeline to forestall confusion and outrage. Despite the fact that some could also be tempted to brush issues beneath the rug to keep away from unhealthy information, from a enterprise standpoint, it’s all the time 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 excellent chortle, spinning a foul factor into a very good contact level with customers.
Through 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 children.” To ascertain belief and authority, crypto companies and NFT undertaking house owners should participate in educating their target market.
Because the cryptocurrency business 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. Keep the best ethics
After all, the easiest way to keep away from a scandal is to forestall 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. Nevertheless, the Logan Paul crypto initiatives taught us to imagine {that a} third social gathering shall be monitoring your exercise and initiatives.
For influencers and companies alike, belief is probably the most precious forex. Due diligence isn’t solely beneficial however vital. The CryptoZoo scandal underscored the dangers of overpromising, under-delivering, and surfacing questionable ethics. Due to the latest crypto scams, persons 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 conduct and transparency with a view 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
