The YouTube luminary had unveiled the CryptoZoo game in 2021, a project that never came to fruition despite fans investing millions in game tokens.
The 28-year-old influencer has now announced his commitment to buying back these tokens, with the stipulation that accepting fans refrain from pursuing legal action against him.
However, it remains doubtful that fans will recoup their entire investment.
CryptoZoo was envisioned as a game where players could engage in the buying, selling, and breeding of virtual animals utilizing cryptocurrency.
At the project’s inception, Paul fervently encouraged individuals to invest in cryptocurrency collectibles for what he dubbed a “highly entertaining game with lucrative returns.”
Regrettably, after raking in millions through the sale of NFTs and crypto coins, he abruptly ceased all references to CryptoZoo and seemingly abandoned the initiative.
The turning point came when fellow YouTuber Coffeezilla released a series of investigative videos in December 2022, prompting Paul to issue an apology and express his desire to “rectify the situation.”
Now, a year later, Paul has officially announced the commencement of the repurchase initiative, estimating a cost of $2.3 million (£1.8 million).
He plans to reimburse players with 0.1 Ether, a cryptocurrency, per NFT purchased during the initial sale in September 2021.
Despite the NFTs being initially sold for 0.1 Ether, their monetary value has since plummeted by 37% since the launch of CryptoZoo NFTs, translating to a financial loss for fans.
In a social media post on X, formerly known as Twitter, Paul stated, “This buyback is a means for me to make amends with those who had the intention to participate in CryptoZoo.
“The buyback is not intended to compensate those who engaged in speculative crypto market activities resulting in losses.”
He emphasized that this initiative is “not designed as an investment vehicle.”
Interested parties have until February 8, 2024, to accept the refund, contingent upon them refraining from pursuing legal recourse against Paul and other stakeholders associated with CryptoZoo.
A notable investor who had invested $40,000 in NFTs informed the BBC last year that he was uninterested in a refund and urged Paul to see the project through, ensuring the much-anticipated game and NFTs fulfilled their potential.
“I don’t believe it will ever reach its full potential, but I think it’s crucial for ‘founders’ to deliver on promises made to investors,” remarked the 35-year-old investor.
Paul had previously endorsed the cryptocurrency coin Dink Doink in June 2021, an investment that subsequently collapsed in value and is now deemed worthless.
Later, in an interview with the New York Times, he expressed regret for promoting the coin without disclosing his involvement in its creation and his financial stake in the cryptocurrency.
“I certainly did not act as responsibly as I should have,” he conceded.
The CryptoZoo case, according to Syedur Rahman, a partner at Rahman Ravelli specializing in crypto fraud-related cases, “underscores the risks associated with investing in a relatively new and unregulated market.”
While Rahman doesn’t foresee these high-profile cases significantly impacting the overall reputation of cryptocurrency, he believes they prompt “discussions about the necessity of additional regulations.”
Regulatory frameworks vary from country to country, but Rahman notes that consumers “might well have rights in NFT purchases or things of that nature.”
Whether they opt for litigation to reclaim their initial expenditures depends on the magnitude of their initial investment, as the costs and inconveniences of legal proceedings may outweigh the potential recovery.
