A Texas federal judge has released three individuals involved in Logan Paul's failed crypto project, CryptoZoo, from an investor suit, while also denying the YouTube celebrity's bid for a default judgment against two other co-founders he claimed were responsible for the venture.

U.S. District Judge Alan D. Albright issued two separate orders on Thursday dismissing defendants Jeffrey Levin, Ophir Bentov and Danielle Strobel from the suit. In dismissing the individuals, Judge Albright adopted a report and recommendation issued by U.S. Magistrate Judge Ronald C. Griffin, who found that the court lacked jurisdiction over them and that the suit failed to state adequate allegations against them.

Judge Albright also denied Paul's motion for default judgment against defendants Eduardo Ibanez and Jake Greenbaum, who he claims have "willfully ignored all claims pending against them in this action for more than two-and-a-half years."

Paul brought cross-claims against Ibanez and Greenbaum in January 2024, accusing them of being "con artists" who duped Paul and who were ultimately responsible for CryptoZoo's failure. However, Judge Griffin said in a July report and recommendation that, despite their nonappearance in the case thus far, it would be premature to grant Paul's request for default judgment, as doing so could affect the original investor suit.

Lead plaintiff Don Holland sued Paul in 2023, alleging that he and others bought nonfungible Zoo tokens required to play Paul's game CryptoZoo that became worthless when Paul abandoned the project in early 2024.

The class says Paul offered to buy back the tokens when the project failed, a plan that "did not mirror defendants' representations," as the buyback program offered plaintiffs only a fraction of their original purchase price.

Judge Griffin issued another report and recommendation in August, stating that the entire action should be dismissed because the plaintiffs hadn't adequately connected Paul to their claims that they were ripped off when CryptoZoo failed. However, the judge also recommended that the plaintiffs be given a chance to amend their pleadings for 26 of the 27 counts asserted in the suit.

The one count that the judge recommended dismissing with prejudice alleged commodity pool fraud in violation of the Commodity Exchange Act, according to court filings.

In his report, Judge Griffin disagreed with Paul's assertion that the proposed class had launched a "shotgun pleading" that lumps him in with his former business partners for each claim, and the report said questions remained about whether Paul directly and personally benefited from misstatements he made to investors about the failed project.

For the class's tort claims — unjust enrichment, negligence, conspiracy to commit fraud, and civil aiding and abetting fraud — neither Paul nor the class had properly explained whether he should be held liable for the actions of the CryptoZoo project as a whole, the judge said.

In a statement to Law360 on Friday, Lindsay Gerdes of Dinsmore & Shohl LLP, counsel for Strobel, said: "We appreciate the court's thoughtful consideration of the issue. Our client never belonged in this litigation. With his decision, the judge agreed with what we have been saying all along."

Counsel for Paul declined to comment Friday, and counsel for the other parties did not immediately respond to requests for comment.

The class is represented by Jarrett L. Ellzey, Leigh S. Montgomery and Alexander G. Kykta of Ellzey & Associates PLLC and Thomas J. Kherkher of Attorney Tom & Associates.

Paul is represented by Benjamin J. Widlanski, Tal J. Lifshitz and Rachel Sullivan of Kozyak Tropin & Throckmorton LLP, Jeffrey A. Neiman and Jason L. Mays of Marcus Neiman Rashbaum & Pineiro LLP, and Shelby O'Brien of Butler Snow LLP.

Strobel is represented by William B. Mateja and Jonathan E. Clark of Sheppard Mullin Richter & Hampton LLP and Mark G. Arnzen Jr. and Lindsay K. Gerdes of Dinsmore & Shohl LLP.

Levin and Bentov are represented by Shelby O'Brien of Butler Snow LLP and Sarah E. Moses, Christopher Chatham and Brad Seiling of Manatt Phelps & Phillips LLP.

The case is Holland v. CryptoZoo Inc. et al., case number 1:23-cv-00110, in the U.S. District Court for the Western District of Texas.