In August 2021, social media influencer and YouTuber Logan Paul introduced the launch of his new cryptocurrency mission, CryptoZoo. Followers of Paul and different traders spent hundreds of thousands on the mission, solely to discover a dysfunctional sport 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 neighborhood.
Who’s Logan Paul?
Logan Paul is a well-liked social media influencer with over 23 million subscribers on YouTube. Except for 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 baby 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 mission as a “actually enjoyable sport that makes you cash.” Buyers 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, traders already spent hundreds of thousands of {dollars} on eggs and the ZOO tokens as a result of Paul’s advertising and marketing (4).
CoffeeZilla’s deep-dive investigation into this Logan Paul crypto scandal might be summarized in 4 elements.
1. Dysfunctional Recreation
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. Buyers collectively misplaced hundreds of thousands (6).
Paul attributed the defective sport 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 regardless that Paul claimed his staff invested 1,000,000 {dollars} in growth (6).
2. Questionable Practices
Leaked textual content messages among the many CryptoZoo staff confirmed that the staff was primarily involved about making the utmost amount of cash from the mission. As a substitute of doing a presale, which might topic CryptoZoo to SEC rules, they might do a stealth token launch, permitting the staff and their pals to purchase out the tokens at a reduced price, elevating the valuation (8).
With these tokens, Paul’s staff imparted guidelines relating to once they might promote and to not impression 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 Group Dynamics
Eddie Ibanez, certainly one of Logan’s CryptoZoo staff 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 the entire statements, and extra, have been fully false. Though Rob knowledgeable Paul’s supervisor, Jeff Levin, of Eddie’s previous, Eddie remained part of their staff and was put accountable for overseeing the sport builders and securing traders (7).
One other member of the staff was Jake the Crypto King. He labored with Paul up to now and was the primary man behind the Logan Paul crypto stealth presale concept. Each Eddie and Jake bought their cash on launch day earlier than the value drop, making hundreds of thousands of {dollars} every (8).
4. Lack of transparency and accountability
As a substitute of coming clear about their struggles, Paul’s staff went radio silent for a 12 months with solely obscure guarantees to repair the sport. This led to some traders shedding much more cash, as they held their cash, satisfied that Paul would observe 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 traders, and promised to ship a practical CryptoZoo sooner or later, Logan Paul has not been absolved of accountability.
- Class-action Lawsuit: Buyers have filed a class-action lawsuit towards Logan Paul. They claimed that CryptoZoo was a “rug pull,” a rip-off the place NFT builders abandon a mission after taking traders’ cash.
- Unfavorable impression on Logan Paul’s popularity: The CryptoZoo scandal had a large impression on Logan Paul’s popularity, 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 traders (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 consequence might have contributed to a destructive notion of influencers, their initiatives, and the cryptocurrency market as an entire.
1. Transparency is vital
Like another firm, transparency with regard to mission 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 essential.
For CryptoZoo, Paul would have vastly benefited from conserving his traders up to date with a tentative timeline to forestall confusion and outrage. Although some could also be tempted to brush issues beneath 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 popularity.
For instance, when KFC ran out of hen, they ran an apology that not solely conveyed their sincerity but additionally gave audiences an incredible snort, spinning a nasty factor into a great contact level with shoppers.
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 mission homeowners should participate in educating their audience.
Because the cryptocurrency trade develops, on a regular basis traders 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!
To maintain your NFT marketing campaign viable and profitable, learn up on these NFT key phrases.
3. Preserve the very best ethics
After all, one of the best ways 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 occasion will probably be monitoring your exercise and initiatives.
For influencers and companies alike, belief is essentially the most precious foreign money. Due diligence is just not solely advisable however needed. The CryptoZoo scandal underscored the dangers of overpromising, under-delivering, and surfacing questionable ethics. Due to the latest crypto scams, individuals are turning into warier than ever about crypto initiatives run by influencers.
Logan Paul has an extended highway 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 traders. Whether or not you’re an influencer or a enterprise, always remember that having belief is your greatest 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
