World famous soccer star Chritiano Ronaldo has found himself the subject of a class-action lawsuit in the US which is laying claim to damages in excess of $1 billion, as a result of his endorsement of Binance, the world’s largest cryptocurrency exchange by volume.
The lawsuit, which was filed in the Southern District of Florida, alleges that Ronaldo engaged in a “deceptive and unlawful” promotion of Binance, and especially its non-fungible tokens (NFTs), and this produced substantial financial losses for investors.
The basis for the dispute is the CR7 NFT collection by Binance, which was launched with Ronaldo’s advertising support in November of 2022. The plaintiffs allege that because of the endorsement of Ronaldo, there was a 500 percent surge in the searches online for Binance, and this significantly impacted investor behavior. The lawsuit goes on to claim that this led investors to engage in risky and unsafe investments in what the lawsuit terms “unregistered securities.”
The lawsuit notes that under the rules of the Securities and Exchange Commission (SEC), celebrities endorsing financial products, such as cryptocurrency products, must disclose any relevant payment they receive to the public. The lawsuit claims that Ronaldo failed to meet this legal obligation, and that his relationship with Binance was not transparent.
Neither Binance nor Ronaldo have commented officially on the legal proceedings. Reports indicate both parties intend to collaborate in the future, which analysts say adds complexity to the case.
The legal action follows a settlement between Binance and the Justice Department which will see the cryptocurrency exchange pay a $4.3 billion penalty to the US government over charges of money laundering and failure to adhere to US financial rules, and its CEO, Changpeng Zhao, possibly be sentenced to up to 18 months or more of prison time. The company had recently settled another lawsuit which accused it of operating as an unregistered securities exchange and violating US securities laws.
Ronaldo is just the latest of a number of celebrities who have faced consequences for endorsing crypto products. Both Tom Brady and Kim Kardashian have found themselves in similar legal battles over their endorsement of cryptocurrency products or services.
The case is shining a light upon the nature of the regulatory frameworks around both celebrity endorsements and cryptocurrency investments. The lawsuit could have far-reaching consequences for the cryptocurrency industry as well as the celebrities who delve into endorsing its products. Analysts say it is certain that this landmark case which lies at the nexus of sports, entertainment, finance, cryptocurrencies, and regulatory agencies will be watched closely by investors and industry observers.
