Football star Cristiano Ronaldo is currently embroiled in a class action lawsuit in the United States related to his endorsement of Binance, the world’s largest cryptocurrency exchange.
The litigants argue that Ronaldo’s promotion led them to make investments resulting in financial losses, seeking damages surpassing $1 billion (£790 million).
In November 2022, Binance introduced its inaugural “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. These NFTs, which are digital assets without a tangible presence, were intended to reward fans for their years of support. NFTs are commonly used to signify ownership of digital content such as images or videos.
The “CR7” brand, derived from Ronaldo’s initials and shirt number, extends across various products, contributing to his status as one of the world’s wealthiest athletes.
Ronaldo, in a social media video, announced the partnership, expressing a desire to revolutionize the NFT space and elevate football.
Despite the initial NFT prices starting at $77 in November 2022, they reportedly depreciated to around $1 a year later. The claimants argue that Ronaldo’s endorsement caused a “500% increase in searches” for Binance, a cryptocurrency exchange registered in the Cayman Islands. This surge allegedly led people to invest in what the claimants describe as “unregistered securities,” including Binance’s BNB cryptocurrency.
The claimants contend that these assets fall under the category of securities according to the US Securities and Exchange Commission (SEC), requiring celebrities endorsing them to adhere to US law. SEC Chair Gary Gensler emphasized the importance of celebrities disclosing payment details when endorsing such investments.
The lawsuit alleges that Ronaldo failed to disclose the amount he was compensated for promoting Binance. Nigel Green, CEO of consulting firm DeVere Group, emphasized that the issue extends beyond Ronaldo, urging scrutiny of global regulators for not establishing clear guidelines in this evolving financial landscape.
Despite the legal challenges, Ronaldo and Binance hint at future collaborations, as indicated by Ronaldo’s recent social media post mentioning they are “cooking something up.” The class action suit follows the US Justice Department’s directive for Binance to pay $4.3 billion (£3.4 billion) in penalties and forfeitures, accusing the exchange of facilitating users in evading global sanctions and aiding criminals and terrorists in money transfers.
Binance’s CEO resigned in the wake of admitting to money-laundering violations. Major League Baseball, Formula 1, and Mercedes-Benz also face similar class action lawsuits for promoting the failed crypto-exchange FTX on the same day.