Cristiano Ronaldo faces $1bn lawsuit over Binance ads

5 views 12:48 pm 0 Comments November 29, 2023
 
Cristiano Ronaldo, the footballer, is currently the subject of a class-action lawsuit in the United States related to his endorsement of Binance, the world’s largest cryptocurrency exchange.

The plaintiffs claim his endorsement led to them making loss-making investments.

They seek damages of “a sum exceeding” $1bn (£790m).

The BBC has contacted Ronaldo’s management company and Binance for comment.

In November 2022, Binance announced a series of CR7 non-fungible tokens (NFTs), which Ronaldo said “rewards fans for all the years of support”.

“CR7” refers to the footballer’s initials and shirt number and is used as branding in a range of products, from footwear to fragrances, that have helped him make him one of the wealthiest athletes on earth.

In a social media video announcing the partnership, Ronaldo told would-be investors, “We are going to change the NFT game and take football to the next level.”

The cheapest NFT from the first collection of CR7 NFTs was priced at $77 when it went on sale in November 2022, but one year later, the most affordable token from that same group was priced at around $1.

The claimants allege that Ronaldo’s promotion of Binance led to a “500% increase in searches” for the crypto exchange, which is registered in the Cayman Islands.

They also say it led people to use the firm to invest in what they call “unregistered securities” – such as Binance’s BNB cryptocurrency.

The US Securities and Exchange Commission (SEC) states that assets like cryptocurrencies can be classified as securities, requiring celebrities endorsing them to adhere to US laws.

SEC Chair Gary Gensler emphasized the need for celebrities to disclose information about their compensation for promoting these investments, including crypto-asset securities. Gensler advised investors to conduct thorough research and understand the reasons behind celebrity endorsements before making investment decisions.

The claimants allege Ronaldo should have done this but did not.

Nigel Green, CEO of consultancy firm DeVere Group, said the problems at the heart of the case were more comprehensive than just one footballer.

“It is crucial to recognize that blaming Ronaldo alone oversimplifies a complex issue,” he said.

“Instead, attention should also be directed towards global regulators who have been slow to establish clear guidelines for this evolving financial landscape.”

Plans

Despite this case, Ronaldo and Binance appear to have plans to work together again in the future, with a recent social media post from the footballer saying they are “cooking something up.”

Neither have responded to the BBC’s requests for comment.

The class action suit was filed a week after the US Justice Department told the firm to pay $4.3bn (£3.4bn) in penalties and forfeitures.

It accused Binance of helping users bypass sanctions around the world and of making it easy for criminals and terrorists to move money.

Its chief executive, Changpeng Zhao, resigned from the firm, admitting money laundering violations.

Major League Baseball, Formula 1, and Mercedes-Benz also face class action lawsuits filed on the same day over their promotion of failed crypto exchange FTX.