Logan Paul, the massively popular social media personality, is facing fresh questions over his cryptocurrency dealings amid ongoing concerns he may have profited from misleading fans.
The BBC has seen new evidence suggesting he promoted investments without revealing he had a financial interest in them.
The influence of Paul – whose YouTube channel has more than 23 million followers – appears to have caused prices in these investments to spike, leading to suggestions he could have profited from sales of any tokens he held.
Paul also currently faces a multi-million-dollar lawsuit over a failed crypto project called CryptoZoo.
He denies any wrongdoing.
The BBC has discovered that shortly before Paul tweeted about a particular crypto coin in 2021, an anonymous crypto wallet with close connections to his public wallet had traded in the coin.
That anonymous wallet went on to make a $120,000 (£92,000) profit.
Crypto wallets (which can be physical devices or an online service) hold users’ keys to their accounts, and let people send, receive and spend crypto.
Our finding comes after Time Magazine reported similar activity involving a different cryptocurrency and another anonymous wallet.
For several months, Paul refused to talk to the BBC about our investigation. Then he appeared to relent, inviting us to interview him at his gym in Puerto Rico.
However, when our crew arrived, a Logan Paul lookalike turned up in the YouTuber’s place, shortly followed by a crowd shouting abuse about the BBC.
Minutes after abandoning the interview, we received a lawyer’s letter on behalf of Paul, warning us of the possible consequences if we published our findings.
Meme coins
Logan Paul built a worldwide following as an internet celebrity by uploading short video clips, first to the now-closed platform Vine, and then on YouTube.
About three years ago, Paul’s videos began mentioning cryptocurrency (crypto, as it is commonly known) more and more.
Crypto is a form of digital money that uses secure technology to work, without the need for a central bank.
In 2021, Paul promoted a series of extremely high-risk crypto tokens called “meme coins”.
These are usually inspired by internet jokes or memes and are supported by online communities. Meme coins have no other real purpose other than to be traded and, since they have no intrinsic worth, their value can – and often does – drop to zero.
Paul extolled the virtues of an Elon Musk-themed meme coin known as Elongate. “Elongate made me rich. Elon baby let’s go!” Paul announced in a video clip to Maverick Club, his subscription-only fan club.
Following this namecheck, the price of Elongate rose by over 6,000% to an all-time high. It then remained at that price for a few hours before it crashed.
We cannot be sure of Logan Paul’s intentions when he released his clip. However, his mention of Elongate may have affected its price.
Tech journalist Will Gotsegen says crypto is a market driven to some extent by social media and influencers: “A big guy with a lot of influence… someone like Logan Paul, buys a tonne of crypto and tells their followers about it. They’re going to buy it too.”
The anonymous crypto wallet analysed by the BBC appears to have close connections to Paul.
Anyone can see the transactions made by a wallet, but the owner can choose to remain anonymous. If an owner attaches their name or personal details it becomes a public wallet.
We could see that the wallet first received funds in February 2021 from a public wallet owned by Logan Paul. It then started buying and trading crypto.
The wallet was later paid funds from Maverick Club and held Elongate when Paul promoted it on 10 May 2021.
Shortly after, it also traded in another Musk-related meme coin – after Paul had tweeted that it was headed “to the moon”. In the crypto community, this means someone believes the price of the coin is about to shoot up.
About an hour before Paul’s tweet, the unknown wallet purchased almost $160,000 (£123,000) worth of the token. The tweet prompted an influx of buyers, spiking the price.
Twelve hours later, the wallet sold most of its holding. The total profit made from this trade appears to be just over $120,000 (£92,000).
Logan Paul chose not to respond to the BBC’s allegations regarding the crypto wallet, the trading that occurred within it, or his connection to it, despite responding to some of our other requests via his legal team.
Dink Doink
In June 2021, Paul also promoted a meme coin called “Dink Doink”.
Anyone who bought it would own shares in a cartoon character that resembled a metal coil. They would earn a portion of its earnings if it appeared in a TV show or film.
Paul promoted the token on Twitter (as the site was then known), and told a Telegram group dedicated to Dink Doink that he “believed” in it, saying: “I think it’s going to go crazy.”
Again, this led to a huge influx of buyers, causing Dink Doink’s value to spike. Then – following a familiar pattern – large-scale holders of the token began selling, causing its price to fall by 96% in just two weeks.
Time Magazine analysed another anonymous wallet that had bought Dink Doink prior to Logan Paul’s promotion of the coin and then sold its holding shortly after. This wallet later sent $100,000 (£78,000) to Paul’s public wallet.
When the BBC asked the influencer about this wallet, his lawyers did not deny that it belonged to him, or was held for his benefit, but were adamant that the $100,000 that was transferred was not related to Dink Doink.
They do accept that Paul traded Dink Doink, but say he only made $17,000 (£13,400).
Puerto Rico
For several months, Paul refused to be interviewed by the BBC.
Then, unexpectedly, he agreed to talk to us at the boxing gym in Puerto Rico that he co-owns with his brother.
We sent Paul a list of the allegations we wanted him to respond to, and his PR team requested we travel to the Caribbean island, so he could answer in person.
They also insisted we flew into the island while it was being pummeled by Tropical Storm Ernesto, which had knocked out power to hundreds of thousands of people.
At the gym, we noticed a strange atmosphere – with a suspicious number of his own cameras pointed at us. Paul’s assistant insisted our cameras should be recording from the moment the star entered the room, because of his strict schedule and timekeeping.
Then things became even stranger. Instead of Logan Paul, a lookalike arrived and sat down in front of our reporter, Matt Shea, and began impersonating the YouTuber.
We called him out and began complaining to Paul’s assistant, asking whether the real Logan Paul would be coming. At that moment, a group of people suddenly appeared, apparently from nowhere, wielding banners and shouting that the BBC were “paedophiles”.
We had flown all that way just to be trolled.
In the past few years, a number of celebrities have run into legal trouble for promoting crypto to followers without disclosing that they had vested interests.
Kim Kardashian was fined $1.26m (£1m) in 2022 for promoting a token called EthereumMax on her Instagram account.
According to Gary Gensler, the head of the Securities and Exchange Commission (SEC), the body policing the US investment industry, if a celebrity is promoting a particular crypto token, they are “supposed to tell you if they get paid, how much they get paid, whether they own the tokens, whether they made money on the tokens, whether they actually know something about the project”.
Gary Gensler, head of the SEC: Celebrities should be open about their financial links with crypto
CryptoZoo
Logan Paul is now facing a lawsuit concerning his next venture in crypto – CryptoZoo.
This was marketed as an online trading card game, but instead of cards, CryptoZoo was to use NFTs (non-fungible tokens) – collectible pieces of digital art that can have a value of their own.
To play CryptoZoo, it was necessary to buy a cryptocurrency called Zoo Token, that could then be used to buy NFT “eggs”.
These eggs were supposed to eventually hatch into NFT “animals” that would breed and give birth to NFT “hybrid animals” with names like penguin-shark and panda-fin.
Paul’s team claimed these hybrid animals would somehow make participants money by passively generating more Zoo Tokens.
“It’s a really fun game that makes you money,” he told his audience shortly ahead of the launch in September 2021.
CryptoZoo attracted about $18.5m (£14.3m) in investment.
Rueben Tauk – a 21-year-old from north-east England – was among the Logan Paul fans who bought into CryptoZoo.
“I was really excited to be part of something that he was doing.”
However, the game was beset by problems from the moment it was released.
“We were given certain expectations about features that would be released,” Rueben told us. “A lot of the time those features wouldn’t work.
“After a certain point, you start to realise that something’s wrong.”
Rueben Tauk lost £33,000 investing in CryptoZoo
The value of the Zoo Tokens and the eggs started to plummet. Rueben says he personally lost £33,000.
At least 130 investors are now involved in a lawsuit against Paul (Rueben is not one of them). They claim they lost about $4.2m (£3.25m).
The lawyer behind the claim, Tom Kherkher – himself a popular YouTuber on legal affairs – says the failure to deliver the game forms only part of the case.
He says leaked messages reveal Paul and his team were involved in a “stealth launch” of the Zoo Tokens, allowing them to quietly buy in at a low price.
“The team appeared to agree that they can begin selling once the total value of all the Zoo Token in circulation hits $200m [£157m],” he says.
“If you had that document with that exact verbiage issued by a CEO of a publicly traded company, they would be charged with fraud in two seconds. That is insider trading.”
Paul has repeatedly denied any wrongdoing relating to CryptoZoo. Instead, he has laid the blame on other members of the team whom he also says failed to deliver the promised features.
Earlier this year, Paul announced a partial compensation scheme for disappointed investors. He promised to refund people who had bought the NFT eggs, but only if they agreed not sue him for anything relating to CryptoZoo.
Paul is also bringing a libel claim against one of his online detractors in the USA, for claims made about his motives.
Logan Paul’s immense popularity depends on his fans, and shows little sign of declining.
2023: KSI (left) and Logan Paul publicise their soft drink, Prime, in Copenhagen (Image: Reuters)
In recent years, Paul has turned his hand to boxing and wrestling, as well as launching the drinks company Prime, with British influencer KSI.
The product became notorious for its viral launch – with only a limited stocks made available, Prime spawned a re-sale market with bottles being advertised for hundreds of pounds. It was a testament to both Logan Paul and KSI’s influence over their primarily young audience.
However, for at least one fan, his image has been tarnished for good.
“Once you listen to someone and trust what they’re saying and they betray that trust,” says Rueben Tauk, “their words don’t mean anything to you any more.”
Source: bbc.co.uk
World Justice News editorial note: World Justice News have reproduced an article by the BBC and make no claims whether any of the allegations made against Logan Paul (or his Look Alike) are true or false.
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