Holland V Cryptozoo Inc Et Al

Case 1:23-cv-00110 Document 1 Filed 02/02/23 Page 1 of 26
IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
DON HOLLAND, individually and on behalf of §

all others similarly situated, §
§
Plaintiff, §
§ Civil Action No. 1:23-cv-110
vs. §
§ JURY TRIAL DEMANDED
CRYPTOZOO INC., a Delaware Corporation, §
LOGAN PAUL, DANIELLE STROBEL, §
JEFFREY LEVIN, EDUARDO IBANEZ, §
JAKE GREENBAUM a/k/a CRYPTO KING, §
and OPHIR BENTOV a/k/a BEN ROTH, §
§
Defendants. §
§
COMES NOW, Plaintiff Don Holland (“Plaintiff”), on behalf of himself and all other
similarly situated individuals, and alleges on personal knowledge, investigation of his counsel, and
on information and belief, the following claims against Defendants CryptoZoo Inc., Logan Paul,
Danielle Strobel, Jeffrey Levin, Eddie Ibanez, Jake Greenbaum a/k/a Crypto King, and Ophir
Bentov a/k/a Ben Roth (collectively, “Defendants”):
I. NATURE OF ACTION
1. Plaintiff Don Holland is a police officer residing in Round Rock, Texas who
purchased digital currency products from Defendants.
2. CryptoZoo Inc. is a Delaware corporation that created and/or sells digital currency
products in the form of a digital currency called Zoo Tokens, which could be used to purchase
Defendants’ other products, CryptoZoo Non-Fungible Tokens (“CZ NFTs”), for use in its online
game CryptoZoo. Non-Fungible Tokens (“NFTs”), as discussed below, are a form of digital assets
that can be purchased, sold, and transferred on the Binance blockchain.
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3. Logan Paul is an entertainer with a sizeable online audience. Based on his own
statements, information, and belief, he is a founder and majority owner of CryptoZoo Inc.
4. Danielle Strobel is Logan Paul’s assistant and one of the founders of CryptoZoo
Inc.
5. Jeffrey Levin is Logan Paul’s manager and one of the founders of CryptoZoo Inc.
6. Eduardo Ibanez is the lead developer of CryptoZoo and one of the founders of
CryptoZoo Inc.
7. Jake Greenbaum a/k/a Crypto King is one of the founders of CryptoZoo Inc.
8. Ophir Bentov a/k/a Ben Roth is the manager of the CryptoZoo community.
9. Defendants promoted CryptoZoo Inc.’s products using Mr. Paul’s online platforms
to consumers unfamiliar with digital currency products, leading to tens of thousands of people
purchasing said products. Unbeknownst to the customers, the game did not work or never existed,
and Defendants manipulated the digital currency market for Zoo Tokens to their advantage.
10. The Defendants executed a “rug pull,” which is a colloquial term used to describe
a scheme in which an NFT developer solicits funds from prospective NFT purchasers promising
them certain benefits. Once the purchasers’ funds are used to purchase the NFTs, the developers
abruptly abandon the project and fail to deliver the promised benefits all while fraudulently
retaining the purchasers’ funds.
11. As part of Defendants’ NFT scheme, Defendants marketed CZ NFTs to purchasers
by falsely claiming that, in exchange for transferring cryptocurrency to purchase the CZ NFT,
purchasers would later receive benefits, including, among other things, rewards, exclusive access
to other cryptocurrency assets, and the support of an online ecosystem to use and market CZ NFTs.
In reality, soon after completing the sale of all their CZ NFTs, Defendants, together with others,
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transferred millions of dollars’ worth of purchasers’ cryptocurrency to, among other places, wallets
controlled by Defendants.
12. Acknowledging CryptoZoo’s failings on January 13, 2023, Mr. Paul released a
video promising to (1) “burn” his and Mr. Levin’s Zoo Tokens, (2) create a “rewards program for
disappointed Base Egg and Base Animals holders,” and (3) to finish and deliver the game. The
rewards program involves “burn[ing] your Base Egg or Base Animal for the mint price (0.1
Eth/equivalent in BNB)”—only two of three sets of CZ NFTs in CryptoZoo. The program does
not include Defendants’ profitable Zoo Tokens used to participate in the failed CryptoZoo or the
third set of CZ NFTs, Hybrid Animals.
13. Around the same time, Mr. Paul—or someone acting on his behalf—posted
messages to the CryptoZoo community confirming the exclusion of consumers who had already
sold CZ NFTs from the “rewards program.”
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14. Paul also posted that no one in the CryptoZoo community should put any more
money into CryptoZoo, framing it as an investment, before saying CryptoZoo was “not intended
as an investment vehicle.”
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15. Mr. Paul stated he “would no longer be the scapegoat for anyone’s financial
decisions” in denying responsibility for Plaintiff and the CryptoZoo community’s losses.
16. This action seeks redress from Defendants for their fraudulently promoting and
selling products that did not function as advertised, failing to support the CryptoZoo project, and
manipulating the digital currency. Defendants operated this fraudulent venture to exploit and steal
from Plaintiff and other customers who trusted Mr. Paul’s false representations. As a result,
Defendants defrauded Plaintiff and thousands of other consumers, and unjustly enriched
themselves by profiting off Plaintiff and others without delivering on their promises.
17. Plaintiff is one of numerous consumers who purchased Zoo Tokens from
Defendants and who was damaged by Defendants’ manipulation of the Zoo Token market.
Plaintiff seeks past and future compensation for Defendants’ fraudulent actions and other damages
available under his causes of action.
II. SUBJECT MATTER JURISDICTION AND VENUE
18. This Court has original jurisdiction of this action under 28 U.S.C. § 1332. This
controversy is between citizens of different states, and the matter in controversy exceeds the sum
or value of $75,000, exclusive of interest and costs.
19. Venue in this Court is proper under 28 U.S.C. § 1391(b). The claims asserted in this
action arose in this district; a substantial part of the activities, conduct, and/or damages giving rise
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to the claims occurred in this district; and Defendants have substantial contacts with this district.
III. PARTIES AND PERSONAL JURISDICTION
20. CryptoZoo Inc. is a Delaware corporation with a listed address of 20 Greene Street
#4, New York, NY 10013, and its registered agent, United States Corporation Agents, Inc., located
at 221 N. Broad St., Suite 3, Middletown, DE 19709-1070.
21. Logan Paul is a United States citizen who may be located at 118 Dorado, Beach E,
Dorado, PR 00646-2093.
22. Danielle Strobel is a United States citizen who resides at 5107 Williams Fork Trail,
Apt 211, Boulder, CO 80301-3477.
23. Jeffrey Levin is a United States citizen who resides at 953 Glenhaven Drive, Pacific
Palisades, CA 90272-2202.
24. Eduardo Ibanez is a United States citizen who resides at 53 Kings Highway N.,
Westport, CT 06880-3004.
25. Jake Greenbaum a/k/a Crypto King is a United States citizen who resides at 7311
Avalon Blvd, Alpharetta, GA 30009-2503.
26. Ophir Bentov a/k/a Ben Roth is a United States citizen who resides at 21221 Oxnard
St., Apt 457, Woodland Hills, CA 91367.
IV. BACKGROUND ON DIGITAL ASSETS, CRYPTOCURRENCY, AND NFTS
27. A “cryptocurrency” is a digital or “virtual” currency circulated over the Internet as
a form of value. Cryptocurrencies are created, and their transaction records are verified and
maintained, by a decentralized system using cryptography, rather than through a centralized
authority like a bank or government. Like traditional fiat currency, there are multiple types of
cryptocurrencies—e.g., Bitcoin, Ether, and Binance Token (“BNB”). Due to its decentralized
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nature and limited regulation, cryptocurrency users can transfer funds over the blockchain more
anonymously compared to traditional banking and credit systems.
28. Cryptocurrency owners typically store their cryptocurrency in digital “wallets,”
which are identified by unique electronic “addresses.” Wallets allow cryptocurrency users to store
and retrieve their digital assets, and can hold multiple cryptocurrencies. Each digital wallet has a
unique cryptographic address, which is used to facilitate transfers of cryptocurrency between
wallet addresses.
29. These types of cryptocurrency transactions are completed using (1) a “public key,”
which is akin to a bank account number or public-facing email address, and (2) a corresponding
“private key,” which is akin to a bank 4-digit PIN or email password that allows a user the ability
to access and transfer value or information stored at the public address. Users may transfer
cryptocurrency to the public address represented as a case-sensitive string of letters and numbers,
26 to 36 characters long. Each public address is controlled and/or accessed using a unique
corresponding private key. Only the holder of an address’s private key can authorize transfers of
cryptocurrency from that address to another cryptocurrency address. A user may control multiple
public blockchain addresses simultaneously.
30. Each cryptocurrency transaction, regardless of the cryptocurrency denomination, is
recorded on a “blockchain,” which acts as a public accounting ledger. Unlike a traditional bank’s
ledger, the transactions reflected in a blockchain are distributed across numerous participants that,
together, form a network. For each cryptocurrency transaction occurring on a blockchain, the
blockchain public ledger records, among other things, the following transaction details: the date
and time; the unique cryptocurrency addresses involved in the transaction, including the addresses
of the sending and receiving parties; and the amount of cryptocurrency transferred.
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31. The blockchain does not identify the parties who control the cryptocurrency
addresses involved in each transaction. However, because each cryptocurrency address is unique,
anyone can review other transactions recorded on the blockchain related to the transfer and trace
the flow of cryptocurrency. Tracing cryptocurrency to a particular user can be complicated,
however, by a user’s reliance on multiple cryptocurrency addresses to transfer funds or the use of
“mixers,” which, in practice, can be used to obscure the link between the sender and receiver of
transferred cryptocurrency by commingling cryptocurrencies from multiple transferring parties
into a pool before sending specific amounts on to an intended recipient.
32. An NFT is a unique digital item that is recorded on a blockchain and cannot be
copied, substituted, or subdivided. In other words, each NFT is a one-of-a-kind digital item. NFTs
can also be transferred on the blockchain. Many NFTs exist as part of the Ethereum blockchain.
Like cryptocurrencies, NFTs are uniquely identifiable on the blockchain. Once minted, an NFT
can no longer be edited, modified, or deleted.
33. NFTs can be created in multiple forms, but one of the most common types of NFTs
is an image data file similar to a .jpeg image file. However, unlike a .jpeg image file, the NFT
provides the owner with an electronic image and corresponding certificate of ownership. NFTs
can also act as a “utility” token, allowing an NFT owner to access reward programs, giveaways,
and access to other digital assets by virtue of their NFT ownership.
34. NFTs are created through a process referred to as “minting” and relies on the use
of a “smart contract.” A smart contract is a piece of computer code that runs on a blockchain. In
simple terms, a smart contract is a program that automatically executes defined tasks when and if
certain conditions are met. A smart contract system often follows “if . . . , then . . .” statements.
For example, a smart contract might be coded to release electronic currency to a party
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automatically upon the occurrence of an agreed-upon event without the need for further action by
either party to the contract. The minting of NFTs relies on smart contracts to govern the creation,
sale, and any subsequent transfers of the NFTs after minting. NFT smart contract code is publicly
viewable on the blockchain.
V. MISNOMER / ALTER EGO
35. In the event any parties are misnamed or are not included here, it is Plaintiff’s
contention that such was a “misidentification,” “misnomer,” and/or such parties are/were “alter
egos” of parties named here. Alternatively, Plaintiff contends that such “corporate veils” should
be pierced to hold such parties properly included in the interest of justice.
VI. PRINCIPAL-AGENT LIABILITY
36. All allegations here of acts or omissions by Defendants include, but are not limited
to, acts and omissions of such Defendants’ officers, directors, operators, managers, supervisors,
employees, affiliates, subsidiaries, vice-principals, partners, agents, servants, and owners. Plaintiff
alleges that such acts and omissions were committed or made with express and/or implied authority
of the Defendants, or were ratified or otherwise approved by the same Defendants; or otherwise
that such acts or omissions were made in the routine, normal course of the actor’s employment or
agency, and within the scope of the agency or employment, as the case may be.
VII. FACTUAL ALLEGATIONS AS TO PLAINTIFF
37. Plaintiff began investing in cryptocurrency in 2016. In 2021, Plaintiff was told by
his son about a new NFT project with Logan Paul. CryptoZoo was promoted by Mr. Paul as a
“game that makes you money” with a “massive team” supporting it, funded by “like a million”
dollars Mr. Paul claimed to have invested. In August of 2021, Defendants released the Zoo Tokens,
CZ NFTs, and CryptoZoo’s terms stating “[Defendants] will strive to do the best for the project
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and the community.” See Exhibit 1. Shortly thereafter Plaintiff invested an initial $1,000 to
purchase Zoo Tokens, which he used to purchase an CZ NFT.
38. After the launch date came and went, the investment initially went down in price
before going up and then back down which is when a lot of individuals began to fear the project
due to lack of positive developments. Like others, Plaintiff thought there was long term merit in
the project due to the false affirmations by the development team, including from Ben Roth. It was
a steady drip of information on positive developments—which were untrue—that led him to
believe the project was legitimate. Accordingly, Plaintiff spent an additional approximately $2,000
after his initial investment for a total of $3,000.
39. Once he saw Logan Paul announce another NFT project and started ignoring ZOO,
he realized his money was likely lost. CryptoZoo was never released as advertised and the value
of the Zoo Tokens and CZ NFTs plummeted.
40. The value continued to drop because Defendants manipulated the market for Zoo
Tokens by buying and selling them in bulk. Defendants caused Plaintiff to effectively lose the vast
majority of the value of the assets (~$3,000) he used to purchase the Zoo Tokens.
41. Defendants’ scheme caused damages to Plaintiff and other consumers. Defendants
knew consumers like Plaintiff would be convinced to purchase their products by Defendants’ false
representations of profit and a functional game.
42. On information and belief, Defendants made the business decision to forego an
expensive and time-consuming process to create a functional CryptoZoo game or support it, and
instead deliberately undertook a scheme to defraud Plaintiff and other consumers.
43. On information and belief, June 11, 2021, was considered internally by Defendants
as “Zoo Day,” the day upon which they released—without any public notice—their digital
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products for purchase on the Binance blockchain. On Zoo Day, and until the release was publicly
announced, Logan Paul, Danielle Strobel, Jeffrey Levin, Eddie Ibanez, and Jake Greenbaum a/k/a
Crypto King purchased these digital products at an artificially low value. Soon after the project
was publicly announced, Eddie Ibanez, Jake Greenbaum, and potentially other Defendants, sold
large amounts of the digital products for an immediate and large profit, effectively stealing the
money of consumers who had invested. Defendants knew they were supposed to hold onto any
early purchased digital products until months after the public release because they knew that
selling before then constitutes a “rug pull” and is fraudulent. Due to the unconscionability of
Defendants’ fraudulent scheme, Defendants should disgorge the revenue, profit, and any other
gains made therefrom to Plaintiff.
44. On information and belief, Defendants manipulated the Zoo Token market. Their
standard operating procedure has been to promise products they failed to deliver on only to
abandon the project and community they promised to support. Due to these unconscionable
practices, Defendants should disgorge any revenue, profits, or any other gains from their scheme
to Plaintiff.
45. Logan Paul and Defendants knew or should have known that they were falsely
advertising a non-functional product and that consumers would be deceived by their false
representations. Defendants acted with reckless disregard when they made such false
representations and are responsible for Plaintiff’s damages.
VIII. CLASS ACTION ALLEGATIONS
46. Plaintiff brings this action under Rule 23(b)(2) and (3) of the Federal Rules of Civil
Procedure on behalf of a class tentatively defined as:
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CRYPTOZOO CLASS:
All persons who purchased Zoo tokens and/or CryptoZoo NFTs while in Texas
prior to the filing of this action.
47. Excluded from the class definition are any employees, officers, directors of
Defendants, and attorneys appearing in this case, and any judge assigned to hear this action.
Plaintiff reserves the right to modify this class definition as he obtains relevant information.
48. The proposed class can be identified through Defendants’ records and Binance
block chain records containing, amongst other information, the relevant digital currency
transactions.
49. Such data indicates there is approximately 20,000 victims and on information and
belief there are thousands in Texas. Accordingly, the number of Putative CryptoZoo Class
Members is believed to be in the thousands, rendering the class so numerous that individual joinder
of all class members is impracticable.
50. Plaintiff is a member of the proposed class.
Commonality
51. There are questions of fact common to the Putative CryptoZoo Class, and those
questions predominate over questions affecting any individual Putative CryptoZoo Class Member.
Common questions of fact include but are not limited to:
a. Whether Defendants fraudulently promoted products or services, that did not
exist as promoted, causing consumers like those in the Putative CryptoZoo Class
to purchase said products or services;
b. Whether Defendants violated their agreement to deliver a functional product and
breached their agreement;
c. Whether Defendants knew CryptoZoo would not be functional when they
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claimed it would be and made false representations despite that knowledge;
d. Whether Defendants had a duty to provide functional product to their
consumers, and if Defendants violated that duty;
e. Whether Defendants failed to deliver on its promises to consumers to provide a
functional product;
f. Whether Defendant made any false representations to their consumers, and
whether Defendants knew those representations to be false, or whether those
assertions were made recklessly and without adequate investigation of their truth
or falsity;
g. Whether Defendants received revenues from their fraudulent venture, and the
amount of those revenues;
h. Whether Defendant manipulated the market for Zoo tokens and their NFTs; and
i. Whether Defendants had a duty to not manipulate the market for Zoo, and
whether Defendants violated that duty.
52. There are questions of law common to the Putative CryptoZoo Class, and those
questions predominate over questions affecting any individual Putative CryptoZoo Class Member.
Common questions of law include but are not limited to:
a. Whether Defendant’s conduct in (1) making false representations about
CryptoZoo, (2) failing to provide a functional CryptoZoo product, and (3)
manipulating the Zoo token market, constitute acts of fraud;
b. Whether Defendant’s conduct common to the Putative CryptoZoo Class has
resulted or will result in Defendant being enriched at the expense of Putative
CryptoZoo Class Members, or in Defendant retaining a benefit to the detriment
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and loss of Putative CryptoZoo Class Members, in frustration of the
fundamental principles of justice, equity, and good conscience, and thus
constitutes unjust enrichment;
c. Whether Defendant’s conduct common to the Putative CryptoZoo Class
demonstrates willfulness, malice, or recklessness, or whether Defendant
proceeded with conscious disregard for the rights of others, therefore entitling
Putative CryptoZoo Class Members to punitive damages.
Typicality
53. Typicality. Fed. R. Civ. P. 23(a)(3). Plaintiff’s claims are typical of the claims of
the Putative CryptoZoo Class Members. Plaintiff would only seek individual or actual damages if
class certification is denied. In addition, Plaintiff is entitled to relief under the same causes of
action and upon the same facts as the other Members of the Putative CryptoZoo Class.
Adequacy
54. Adequacy. Fed. R. Civ. P. 23(a)(4). Plaintiff is an adequate representative of the
proposed Putative CryptoZoo Class because his interests coincide with and are not antagonistic to,
the interests of the Members of the Putative CryptoZoo Class he seeks to represent; he has retained
counsel competent and experienced in such litigation; and he intends to prosecute this action
vigorously. Plaintiff and his Counsel will fairly and adequately protect the interests of the
Members of the Putative CryptoZoo Class.
Superiority
55. Superiority. Fed. R. Civ. P. 23(b)(3). Questions of law and fact common to the
Putative CryptoZoo Class Members predominate over questions affecting only individual
Members, and a class action is superior to other available methods for fair and efficient
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adjudication of the controversy. Liability will be determined based on a common set of facts and
legal theories. Willfulness will be determined based on Defendants’ conduct and knowledge, not
upon the effect of Defendants’ conduct on the Putative CryptoZoo Class Members. The damages
sought by each Member are such that individual prosecution would prove burdensome and
expensive given the complex and extensive litigation necessitated by Defendants’ conduct. It
would be virtually impossible for Members of the Putative CryptoZoo Class individually to redress
effectively the wrongs done to them. Even if the Members of the Putative CryptoZoo Class
themselves could afford such individual litigation, it would be an unnecessary burden on the
courts. Furthermore, individualized litigation presents a potential for inconsistent or contradictory
judgments and increases the delay and expense to all parties and to the court system presented by
the complex legal and factual issues raised by Defendants’ conduct. By contrast, the class action
device will result in substantial benefits to the litigants and the Court by allowing the Court to
resolve numerous individual claims based upon a single set of proof in one case.
IX. CAUSES OF ACTION
A. COUNT ONE: FRAUD
56. Plaintiff incorporates by reference the foregoing paragraphs of this Demand as if
fully set forth here.
57. Defendants failed to disclose that CryptoZoo was non-functional as promoted and
that they would not be supporting the project.
58. Defendants have no practice of providing promised products/projects and
supporting said projects/products.
59. This is a signal attribute of fraud because Defendants represented to provide the
promoted products/projects and to do what was best for the Plaintiff and other consumers.
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Moreover, in related context and as previously alleged, Defendants had a duty to provide the
promoted products/projects and to do what was best for the Plaintiff, investors, and other
consumers, but chose to proceed in violation of this duty.
60. Rather than make candid, straightforward disclosure of their material failures,
Defendants ignored them.
61. Plaintiff and other consumers were ignorant of these material failures and did not
stand in equal opportunity with Defendants to know they existed. They had no way of knowing
what sort of products/projects would be implemented or what contractual terms Defendants
injected to immunize their scheme. In this context these purported contractual terms have the
additional effect of intentionally misleading Plaintiff and other consumers concerning Defendants’
practices. These customers cannot reasonably expect that Defendants would take their assets and
fail to provide a functional CryptoZoo, fail to support the community, or manipulate the Zoo Token
market. But this is reflected repeatedly in Plaintiff’s statements as presented in this Demand.
B. COUNT TWO: EXPRESS BREACH OF CONTRACT
63. Plaintiff alleges that he entered into valid and enforceable express contracts, or was
a third party beneficiary of valid and enforceable express contracts, with Defendants.
64. The valid and enforceable express contracts that Plaintiff entered with Defendants
include Defendants’ representations that they would provide a functional version of CryptoZoo at
the time the Zoo Tokens and CZ NFTs were publicly noticed and/or released as for sale. The
express contracts also include violations of Defendants’ then-current terms of service.
65. Under these express contracts, Defendants and/or their affiliated contractors or
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associates, promised and were obligated to: (a) provide a functional version of CryptoZoo, upon
which the value of Zoo Tokens and CZ NFTs were at least partially dependent; and (b) provide
the agreed terms in exchange for Plaintiff’s and other consumers investments in Defendants’
products/services. In exchange, Plaintiff and other consumers agreed to pay money for these
products/services.
66. Both the (a) provision of a functioning CryptoZoo and (b) the obligation that
Defendants “will strive to do the best for the project and the community” of participants in
CryptoZoo—amongst other obligations—were material aspects of these agreements.
67. At all relevant times, Defendants expressly represented in their promotions that
CryptoZoo would be functional by September 1, 2021, and they “will strive to do the best for the
project and the community [of participants in CryptoZoo].” Defendants had a duty to provide a
functional CryptoZoo product, especially if they were taking assets from Plaintiff and other
consumers in exchange for access to it. Instead, Defendants pocketed Plaintiff’s and other
consumers’ money and mostly forgot, according to the publicly available information, about the
“failed endeavor” until receiving negative media attention.
68. Defendants’ express representations—including, but not limited to, express
representations found in their advertising and promotion—formed an express verbal contract/offer
requiring Defendants to provide a functional CryptoZoo and to “strive to do the best for the project
and the community [of participants in CryptoZoo].”
69. Plaintiff trusted Defendants’ representations and proposed agreements related to
their products. Yet Defendants failed to provide the promoted product and do what was best for
their consumers, even lying about the underlying investment in the project. The CryptoZoo Tokens
and CZ NFTs are essentially worthless, in part because CryptoZoo was never released. Plaintiff
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would not have entered into these agreements with Defendants without believing CryptoZoo
would function and be supported by Defendants.
70. A meeting of the minds occurred, as Plaintiff and other consumers invested in
Defendants digital products in exchange for, amongst other things, a functioning CryptoZoo and
Defendants’ support of it.
71. Plaintiff performed his obligations under the contract when he paid for Defendants’
digital products.
72. Defendants materially breached their contractual obligations to provide a functional
CryptoZoo and support the project.
73. Defendants materially breached the terms of these express contracts, including, but
not limited to, the terms stated in their promotions and then-current terms of service.
74. The ensuing damages were a reasonably foreseeable consequence of Defendants’
actions in breach of these contracts.
75. As a result of Defendants’ failure to fulfill obligations promised in these contracts,
Plaintiff and other consumers did not receive the full benefit of the bargain, and instead received
products that were of a diminished value to that described in the agreements. Defendants therefore
damaged Plaintiff in an amount at least equal to the difference in the value of the Zoo Tokens he
paid for, and the value he was left with.
76. Had Defendants disclosed that CryptoZoo was nonfunctional, or that they were not
going to support the project, neither the Plaintiff nor any reasonable person would have
purchased/invested in Defendants’ products/services.
77. As a direct and proximate result of these breaches, Plaintiff has been harmed and
has suffered, and will continue to suffer, actual damages and injuries, including without limitation
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the loss of assets and loss of use of those assets, out-of-pocket expenses, and the loss of the benefit
of the bargain he had struck with Defendants.
78. Plaintiff is entitled to compensatory and consequential damages suffered as a result
of these breaches.
C. COUNT THREE: IMPLIED BREACH OF CONTRACT
80. When Plaintiff and other consumers provided their investments/monies to
Defendants in exchange for Defendants’ services and products required to participate in
CryptoZoo, they entered into implied contracts with Defendants under which Defendants agreed
to reasonably provide a functional CryptoZoo and support it.
81. Defendants solicited and invited Plaintiff and other consumers to invest/pay for its
digital products as part of Defendants’ regular business practices. Plaintiff accepted Defendants’
offers and provided assets to Defendants.
82. In entering into such implied contracts, Plaintiff reasonably believed and expected
that Defendants would provide a functional CryptoZoo and support the project.
83. Plaintiff provided assets to Defendants reasonably believing and expecting that
Defendants would provide a functional CryptoZoo and support the project.
84. Plaintiff would not have provided his assets to Defendants in the absence of the
implied contract between him and Defendants to provide a functional CryptoZoo and support the
project.
85. Plaintiff would not have entrusted his assets to Defendants in the absence of their
implied promise provide a functional CryptoZoo and support the project.
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86. Plaintiff fully and adequately performed his obligations under the implied
contracts with Defendants.
87. Defendants breached their implied contracts with Plaintiff by failing to provide a
functional CryptoZoo and support the project.
88. As a direct and proximate result of Defendants’ breaches of the implied contracts,
Plaintiff sustained damages as alleged here.
of these breaches.
D. COUNT FOUR: UNJUST ENRICHMENT
fully set forth herein.
91. As a direct and proximate result of Defendants’ intentional and unlawful taking of
Plaintiff’s assets without providing the promised product/services, Plaintiff has been deprived of
the profits and other benefits of purchasing/investing in Defendants’ products. Defendants have
been unjustly enriched by its wrongful receipt and retention of profits and other benefits it deprived
Plaintiff and, in equity, Defendants should not be allowed to retain their revenues and benefits.
92. Plaintiff is entitled to a judgment requiring Defendants to disgorge all sums they
have received as revenue and other benefits arising from its unconscionable and unlawful failure
to provide a functional CryptoZoo, failure to support the project, and manipulation of the Zoo
Token market.
E. COUNT FIVE: VIOLATION OF TEXAS’S DECEPTIVE TRADE PRACTICES

ACT (“DTPA”)
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94. Plaintiff is a consumer under the DTPA.
95. Defendants’ conduct concerning their false advertising, failure to provide the
promised products/services, manipulation of the Zoo Token market, failure to disclose information
concerning the progress of CryptoZoo, and failure to support Plaintiff and the CryptoZoo
community, as enumerated in this Demand, constitute false, unfair, misleading, unconscionable,
and/or deceptive acts under the DTPA These facts were known to Defendants at all times and done
with the intent to induce Plaintiff and consumers to provide assets to Defendants, remain in the
program after it initially failed, or engage in transactions that they would not otherwise have
engaged had the information withheld been known to them.
96. Defendants conduct concerning their misrepresentations and failures as enumerated
in this Demand was unfair, misleading, and unconscionable under the DTPA.
97. Defendants should not be allowed to rely on their terms of service to escape liability
for their accused practices and profit from their own wrong.
98. As a direct and proximate result of Defendants’ intentional, unconscionable,
misleading, unfair, and unlawful conduct, Plaintiff has been deprived of the profits and other
benefits of purchasing/investing in Defendants’ products/services.
99. Plaintiff has been damaged by Defendants’ willful violation of the DTPA and is
entitled to relief in the form of treble damages, attorneys’ fees, and costs.
F. COUNT SIX: NEGLIGENCE
fully set forth herein.
101. By representing to the public that CryptoZoo would be functional, was seeded with
around a million dollars, and that the CryptoZoo community would be supported, Defendants had
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a duty of care to use reasonable means to provide the promised products/services, not manipulate
the Zoo Token market, and support Plaintiff and the other members of the CryptoZoo community.
102. Defendants’ duty of care to provide the promised products/services, not manipulate
the Zoo Token market, and support Plaintiff and the other members of the CryptoZoo community
arose from the special relationship that existed between Plaintiff and Defendants. Defendants were
positioned to ensure that the promised products/services would be delivered, that the Zoo Token
market was not manipulated, and to support Plaintiff and the other members of the CryptoZoo
community.
103. Defendants breached their duties, and thus were negligent, by failing to provide the
promised products/services, not manipulating the Zoo Token market, and failing to support
Plaintiff and the other members of the CryptoZoo community. The specific negligent acts and
omissions committed by Defendants include, but are not limited to:
a. Promoting products or services, that did not exist as promoted, causing Plaintiff
to purchase said products or services under false pretenses;
b. Representing that CryptoZoo would be functional and making false

representations despite that knowledge;
c. Willfully failing to provide functional products and services to their consumer,

even after receiving revenues from their fraudulent venture;
d. Willfully manipulating the market for Zoo Tokens and CZ NFTs; and
e. Willfully failing to support Plaintiff and the CryptoZoo community.
104. It was foreseeable that Defendants’ failures to provide the promised
products/services, not manipulate the Zoo Token market, and support Plaintiff and the other
members of the CryptoZoo community would result in one or more types of injuries to Plaintiff.
of Defendants’ negligent failures.
22
G. COUNT SEVEN: FRAUDULENT MISREPRESENTION
107. Defendants fraudulently represented to the public that CryptoZoo would be
functional and that they would be supporting the project and the CryptoZoo community.
108. Upon information and belief, Defendants knew that CryptoZoo would never be
functional and that they had no intention of supporting the project or the CryptoZoo community,
including Plaintiff.
109. Defendants had a duty to tell its consumers, including Plaintiff, that CryptoZoo
would never be functional and that they had no intention of supporting the project or the CryptoZoo
community.
110. Rather than make candid, straightforward disclosures to their consumers, including
Plaintiff, Defendants willfully concealed that CryptoZoo would never be functional and that they
had no intention of supporting the project or the CryptoZoo community.
111. Plaintiff would not have purchased Defendants’ products but for his reliance on
Defendants’ material statements that CryptoZoo would be functional and that they would be
supporting the project and the CryptoZoo community.
112. As a result, Plaintiff is entitled to compensatory and consequential damages
suffered as a result of Defendants’ fraudulent representations.
H. COUNT EIGHT: CONSPIRACY TO COMMIT FRAUD
114. Defendants conspired with one another and potentially others as yet unknown to
23
commit the acts set forth in this Demand.
115. Said conspiracy constitutes a conspiracy to defraud Plaintiff and other consumers.
116. Plaintiff, unaware of the falsity of statements made by Defendants, and in reliance
on their accuracy, paid money to Defendants based on such fraudulent statements. Plaintiff has
been damaged as a result of Defendants’ conspiracy to commit fraud.
X. DAMAGES
117. Plaintiff hereby adopts by reference each and every foregoing paragraph of the
stated in this Demand as if fully and completely set forth here.
118. Defendants’ conduct and actions discussed above proximately caused injury to
Plaintiff, which resulted in:
i. Loss of use damages for assets diminished by Defendants’ actions;
ii. Actual damages and treble damages under the DTPA;
iii. Exemplary damages under the DTPA and Common Law Fraud;
iv. Actual damages, including economic damages under all causes of action;
v. As a direct and proximate result of Defendants’ breaches of contracts,
Plaintiff sustained damages as alleged here;
vi. Plaintiff is entitled to compensatory and consequential damages suffered as
a result of Defendants’ fraud and actions.
vii. Mental anguish;
viii. Civil penalties;
ix. Prejudgment interest;
x. Attorney’s fees; and
xi. Costs of action.
24
119. Plaintiff further seeks unliquidated damages within the jurisdictional limits of this
Court.
XI. PUNITIVE DAMAGES
120. Plaintiff incorporates the foregoing paragraphs of this Demand as if fully set forth
here.
121. The wrong done to Plaintiff by Defendants was attended by fraudulent, malicious,
intentional, willful, wanton, or reckless conduct that evidenced a conscious disregard for Plaintiff’s
rights. Therefore, Plaintiff seeks punitive damages in an amount to be proven at trial.
XII. ATTORNEY’S FEES
122. Each and every allegation contained in the foregoing paragraphs is realleged as if
fully rewritten here.
123. Plaintiff is entitled to recover reasonable attorney fees and request the attorney’s
fees be awarded under his breach of contract claims.
XIII. INCORPORATION OF PARAGRAPHS
124. Every paragraph in this Demand is hereby incorporated into every other paragraph.
XIV. PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays for judgment against Defendants, awarding relief as
follows:
a. For equitable relief requiring restitution and disgorgement of the revenues

wrongfully retained as a result of Defendants’ wrongful conduct;
b. Holding that the doctrine of unjust enrichment applies and ordering
Defendants to pay Plaintiff all sums received by Defendants flowing from
their illegal and unconscionable activities;
c. For an award of actual damages, compensatory damages, statutory
damages, exemplary damages, and statutory penalties, in an amount to be
determined, as allowable by law;
d. For an award of punitive damages, as allowable by law;
25
e. For an award of attorneys’ fees and costs, and any other expenses, including
expert witness fees;
f. Pre-and post-judgment interest on any amounts awarded; and
g. Such other and further relief as this court may deem just and proper.
Respectfully submitted,
/s/ Jarrett L. Ellzey
ELLZEY & ASSOCIATES, PLLC

Jarrett L. Ellzey
Texas Bar No. 24040864
jarrett@ellzeylaw.com
Leigh S. Montgomery
leigh@ellzeylaw.com
Alexander G. Kykta
alex@ellzeylaw.com
1105 Milford Street
Houston, Texas 77006
Phone: (888) 350-3931
Fax: (888) 276-3455
ATTORNEY TOM & ASSOCIATES

Tom Kherkher (pro hac vice forthcoming)
tom@attorneytom.com
5909 West Loop South Suite 525
Houston, Texas 77401
Phone: (855) 866-9467
26
ClassAction.org
This complaint is part of ClassAction.org's searchable class action lawsuit
database and can be found in this post: Logan Paul Class Action Says YouTuber
Pulled the Rug Out from CryptoZoo NFT Buyers

Holland V Cryptozoo Inc Et Al

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Case 1:23-cv-00110 Document 1 Filed 02/02/23 Page 1 of 26

IN THE UNITED STATES DISTRICT COURT

DON HOLLAND, individually and on behalf of §

Bentov a/k/a Ben Roth (collectively, “Defendants”):

purchased digital currency products from Defendants.

that can be purchased, sold, and transferred on the Binance blockchain.

retaining the purchasers’ funds.

11. As part of Defendants’ NFT scheme, Defendants marketed CZ NFTs to purchasers

third set of CZ NFTs, Hybrid Animals.

sold CZ NFTs from the “rewards program.”

available under his causes of action.

II. SUBJECT MATTER JURISDICTION AND VENUE

or value of $75,000, exclusive of interest and costs.

III. PARTIES AND PERSONAL JURISDICTION

at 221 N. Broad St., Suite 3, Middletown, DE 19709-1070.

Apt 211, Boulder, CO 80301-3477.

Avalon Blvd, Alpharetta, GA 30009-2503.

St., Apt 457, Woodland Hills, CA 91367.

IV. BACKGROUND ON DIGITAL ASSETS, CRYPTOCURRENCY, AND NFTS

27. A “cryptocurrency” is a digital or “virtual” currency circulated over the Internet as

maintained, by a decentralized system using cryptography, rather than through a centralized

anonymously compared to traditional banking and credit systems.

28. Cryptocurrency owners typically store their cryptocurrency in digital “wallets,”

unique cryptographic address, which is used to facilitate transfers of cryptocurrency between

public blockchain addresses simultaneously.

30. Each cryptocurrency transaction, regardless of the cryptocurrency denomination, is

the flow of cryptocurrency. Tracing cryptocurrency to a particular user can be complicated,

transferred cryptocurrency by commingling cryptocurrencies from multiple transferring parties

into a pool before sending specific amounts on to an intended recipient.

can no longer be edited, modified, or deleted.

and access to other digital assets by virtue of their NFT ownership.

viewable on the blockchain.

V. MISNOMER / ALTER EGO

be pierced to hold such parties properly included in the interest of justice.

VI. PRINCIPAL-AGENT LIABILITY

VII. FACTUAL ALLEGATIONS AS TO PLAINTIFF

purchase Zoo Tokens, which he used to purchase an CZ NFT.

a steady drip of information on positive developments—which were untrue—that led him to

after his initial investment for a total of $3,000.

of the Zoo Tokens and CZ NFTs plummeted.

representations of profit and a functional game.

instead deliberately undertook a scheme to defraud Plaintiff and other consumers.

gains made therefrom to Plaintiff.

representations and are responsible for Plaintiff’s damages.

VIII. CLASS ACTION ALLEGATIONS

Procedure on behalf of a class tentatively defined as:

of all class members is impracticable.

50. Plaintiff is a member of the proposed class.

Common questions of fact include but are not limited to:

a. Whether Defendants fraudulently promoted products or services, that did not

to purchase said products or services;

b. Whether Defendants violated their agreement to deliver a functional product and

breached their agreement;

c. Whether Defendants knew CryptoZoo would not be functional when they

claimed it would be and made false representations despite that knowledge;

d. Whether Defendants had a duty to provide functional product to their

consumers, and if Defendants violated that duty;

e. Whether Defendants failed to deliver on its promises to consumers to provide a