Cristiano Ronaldo, the renowned footballer, is facing a class-action lawsuit in the United States over his promotion of Binance, the world’s largest cryptocurrency exchange.
The plaintiffs allege that Ronaldo’s endorsement led them to make investments that resulted in significant losses. They are seeking damages exceeding $1 billion.
In November 2022, Binance launched its first “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. NFTs are digital assets representing ownership of a unique item or content, existing solely in the crypto realm. Ronaldo’s “CR7” brand, synonymous with his initials and shirt number, spans various products, including this NFT collection.
In promoting the NFTs, Ronaldo stated the goal was to elevate the NFT game and bring football to the next level. However, the value of these NFTs plummeted dramatically within a year, with the cheapest in the collection dropping from an initial price of $77 to around $1.
The lawsuit alleges that Ronaldo’s promotion caused a 500% increase in searches for Binance, leading people to invest in what the claimants refer to as “unregistered securities,” such as Binance’s BNB cryptocurrency. Under U.S. law, as stated by the Securities and Exchange Commission (SEC), certain digital assets can be classified as securities. Consequently, endorsements of these assets by celebrities require clear disclosure of the compensation received, which the plaintiffs claim Ronaldo failed to do.
“When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements,” SEC chair Gary Gensler said.
The lawsuit also points out Ronaldo’s massive social media influence, with 850 million followers, as a factor in Binance’s increased popularity and the success of his NFT sales.
While Ronaldo and Binance seem to have plans for future collaboration, the lawsuit comes hot on the heels of Changpeng Zhao’s guilty plea for his role in the cryptocurrency exchange’s failure to maintain an effective anti-money laundering program. U.S. authorities accused Binance of violating anti-money laundering and sanctions laws, citing the exchange’s failure to report over 100,000 suspicious transactions, some of which were linked to organizations deemed as terrorist groups by the U.S., such as Hamas, al Qaeda, and the Islamic State of Iraq and Syria.
As part of the plea deal, Binance agreed to pay fines exceeding $4.3 billion. Zhao himself is set to pay a $150 million penalty to the U.S. Commodity Futures Trading Commission. Prosecutors indicated that CZ could face up to 18 months in prison.
A U.S. federal judge also ruled that Zhao must remain in the United States until a decision is made regarding whether he will be allowed to leave the country prior to his sentencing hearing in February.
