Logan Paul argued in court this week that investors who say they lost $4.1 million to his failed NFT crypto game CryptoZoo “gambled and lost.”
His lawyers said Paul shouldn’t be held responsible for anybody thinking that it was a money-making venture despite calling it, in one podcast appearance, a “fun game that makes you money.”
Paul made the argument in a new document filed in a Texas court where he and business associates involved in the ill-fated development of the game are being sued in a class-action case. Paul announced in January that the game would never be released due to vague “regulatory hurdles.”
Over 100 class members filed an amended complaint at the end of August detailing losses totaling $4,133,774.07, ranging from $100 to $750,000 a person.
In Paul’s latest filing, he points to language in CrytoZoo’s Terms and Conditions, which his lawyers say made clear from the start that the project was never meant as an investment.
“CrytpoZoo are NOT Investment Vehicles,” is the title of the ninth section of the Terms & Conditions.
“CryptoZoo are collectible digital art pieces that also function as fun, Non-Fungible Tokens for you to collect,” the section continues. “They were created as art pieces intended for people to enjoy by collecting, not as a financial instrument. CryptoZoo makes absolutely no promises or guarantees regarding the value of CryptoZoo NFTs aside from the one that we will strive to do the best for the project and the community.”
Despite that language, which the lawyers added the emphasis to, the CryptoZoo class members point to the fact that Paul claimed on his podcast that CryptoZoo would be a “really fun game that makes you money,” which had a “massive team” supporting it and was funded by “like a million dollars.”
They also point to internal communications from the CryptoZoo team which they say prove that the goal of the project all along wasn’t to do the best for the project or the community, but for the self-enrichment of the developers.
Paul’s lawyers argued that the statements “cannot be construed as binding promises as a matter of law.” They note two of the leading plaintiffs in the case represent themselves to be sophisticated cryptocurrency investors, so they should have known better than to believe what Paul said.
“Because they were experienced investors, any reliance they might allege on these representations … would be unreasonable as a matter of law,” Paul’s lawyers wrote.
Paul’s own lawyers also argued that Paul’s claims were “puffery,” because they were “too vague to be actionable.”
Puffery, according to one case Paul’s lawyers cited, is a claim that’s “extremely unlikely to induce consumer reliance.”
They also argue that other statements Paul made boosting the game fall into the “puffery category.”
“No consumer would reasonably construe any of these statements as a contractual term,” Paul’s lawyers wrote. “Representations that a project is ‘important’ or that plans are ‘really fun’ are not promises that one can breach.”
As for the game never being released, Paul’s lawyers argue that that was a potential outcome of a venture like this, claiming that the plaintiffs "never plead any factual allegations showing that Mr. Paul, or the other Defendants, intended not to produce CryptoZoo,” despite their claims.
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