When American influencer Logan Paul announced plans to create his NFT platform Cryptozoo, many people saw an opportunity to make money. A few months after this announcement, the project was never finalized and it was only indignation, bitter experiences and unloading of their wallets that investors reaped. The project turned out to be a huge scam that sucked millions of dollars from investors.
Cryptozoo is a crypto project launched as a game to win in September 2021. You buy a token called Zoo. The received tokens allow you to buy virtual animal eggs or simply NFT. When an egg hatches, she gives it to an animal. And if you feed several animals, it is possible to become hybrid animals. With these hybrid animals or not, their owners have received the promise of daily passive income based on a ratio linked to the investment to which the animal corresponds. In addition, it is possible to burn an NFT to recover the amount taken with the created animal if one wants to get rid of it.
The main argument used to attract investors is initially Paul Logan himself. Paul Logan is a well-known influencer in the United States. And for good reason, he combines the roles of actor and professional wrestler in World Wrestling Entertainment (WWE). He also owns his own YouTube channel, which has more than 23 million subscribers following him. A few months ago, Forbes ranked the top YouTube content creators and Paul Logan was on the list. Paul has also hosted the Impaulsive podcast since November 2018 and has over 4 million subscribers. As a direct effect of this visibility, when Paul announced the creation of a cryptocurrency platform, many people did not hesitate to invest in this project. With such a protective image for Paul, many investors told themselves that he was not afraid of a scam. But far from it!
There are many play-to-win projects. We can quote celebrities Axie Infinity whose token was valued at over $100 last year but is worth just $6 today. To make his project attractive and different from the competition, Paul explained that the animals in the game are artistic masterpieces that result from six months of manual work and not from a mass generation of NFTs by an app. When the first draft of the project was launched, the observation was bitter. Animal images are taken from the Adobe Stock Image Gallery.
On the first day of the soft launch, people were so excited to get a good deal by investing in this project that they bought 2.5 million eggs. Purchase volumes were in the tens of millions per day, while a game debut hadn’t even been delivered. It may seem foolish to invest without a minimum guarantee, but the trust placed in Paul was such that the project raised millions of investments before the game was released. An Australian explains that he invested $500,000 in it, while another speaker confesses that he put more than $50,000 on the table. Investors number in the millions, not counting business angels.
But the problem is when the game was never delivered as such. When the eggs were purchased, keepers never had the opportunity to hatch them into animals and then feed them into hybrid animals. It wasn’t even possible to burn and recover your bet if you wanted to get rid of an egg or an animal. And things got worse when Paul announced that he was working on a secret project. While many believed it was about releasing the game to the public so those who invested in it could recoup their stake, Paul said no. The new project has nothing to do with the old project. The shock wave was overwhelming. After failing to even make a game that a lot of people invested in, here he is moving on to another project as if nothing had happened. On the web, speakers did not fail to call out outrage and deception. It should be noted that at one point the project was estimated at over 2 billion dollars.
To protect himself, Paul explains that the main developer fled to Switzerland with the project’s source code and demands the sum of one million dollars from Paul to make the code available. This, according to Paul, is why the game was killed in ugh. For his part, lead developer Eddie Ibanez defends himself by explaining that he has never received payment for his services as a developer. According to him, this amount corresponds to what Paul owes. Another developer would have also confirmed that Paul would not have their obligations as a developer. Between Paul and Eddie, who should we believe? It should be noted that digging in Edi’s side, the latter would have remained an orphan, while his parents are still alive. But disturbingly, to build a reputation on the mob, he reportedly claimed to be an MIT graduate and working for the FBI in the cyber security department. But all these claims are false.
In addition to Eddie being part of the project, we also had Jake aka Crypto King acting as an advisor. When the project began, it was carried out in two phases. The first phase of the Zoo code sale was launched anonymously to raise funds for the liquidity pool. To do this, the promoters of the project sold the zoo tokens at very low prices to resell them to their company in order to avoid a pre-sale that would attract the eyes of the SEC (Securities and Exchange Commission, the authority American financial market). When the second phase (public zoo token sale) started in September 2021, the public had the opportunity to buy eggs at a higher price. And token purchases have skyrocketed.
The problem is that in managing the project, Paul did not control any portfolios of other project promoters. In principle, in order to prevent some people who had the opportunity to buy the cheaper token early, to sell as soon as the price rises and therefore cause the price of the token to fall, a conditioning method is put in place. This allows the first buyers to sell their tokens only after a certain period, which allows the project not to die once it is put into public service. But with Paul’s project, it was just verbal recommendations without blocking the wallets. So once the value of the token started to rise, they saw a massive abnormal token sale. After investigating, they realized that some of the founders’ wallets had sold their tokens in bulk. To address this issue, they created a version 2 token and out of approximately 11,250 wallets, only 11,000 received airdrops equal to the amount they had from the first token. Jake, the project advisor known as Crypto King held multiple wallets. He started complaining claiming that he had more than 5 wallets that were blacklisted and that’s why he didn’t get the new token. Apparently, Crypto King who had originally invested $200,000 would have sold the tokens they had in the pool. And since he carried many wallets, not all of them were jammed. Therefore, he would have collected about $6 million after selling his tokens. You could say Paul Logan isn’t guilty, since he apparently didn’t sell them the chips. But it’s nothing.
It is relying on him that many people have invested their money. He is responsible for the failure of this project. He is also liable if his team members start defrauding investors. In addition, he was selling smoke by making false claims about NFTs to be made by artists. He also lied to them that it was a game that would make him money. In the end, no investors other than a few members of Paul’s team were able to make money. Similarly, he has never made a clear assessment of what happened by setting the responsibilities and wants to start a new project. Do you want to make new victims? What we can learn from this case is that the team members started deceiving each other before deceiving the public. It is all these obstacles in the world of crypto sphere that have pushed Stephen Diehl, a software engineer, has bluntly stated that NFTs (non-fungible tokens) are a scam. Fred Ehrsam, co-founder of Coinbase, agrees, saying that about 90% of NFTs will be worthless in 3-5 years. With this case of NFT fraud and cryptocurrencies involved, what comments do you make?
What do you think about this scam under the guise of NFT?
What do you think about people who continue to invest in NFT?
Have you ever been a victim of a scam after investing in an NFT or cryptocurrency project? Your experiences are welcome.
What recommendations can you make to users so they don’t get scammed?