Cristiano Ronaldo is facing a $1 billion class action lawsuit in the US after promoting his non-fungible token (NFT) collaboration with cryptocurrency exchange Binance on social media.
Binance has taken a hit to its reputation recently. Last week, Binance Chief Executive Changpeng Zhao resigned from the company after pleading guilty to money laundering violations. The United States Department of Justice also said that Binance must pay $4.3 billion (£3.4 billion) in fines – and report suspicious activity to federal authorities.
Last November, Ronaldo launched a collection of NFTs with the company, the cheapest of which was priced at $77. A year later, it’s worth about $1. Plaintiffs are suing a 38-year-old man in Florida, claiming they invested at losses based on his social media advertisements for Binance products.
athletic Studied the 130-page lawsuit to explain the claims against Ronaldo and analyze what it means for the wider issue of footballers promoting controversial investments.
Cristiano Ronaldo’s representatives did not comment when contacted. Binance has also been contacted for comment.
What did Ronaldo do?
Ronaldo announced a tie-up with Binance in November 2022 but the lawsuit says the deal was signed months earlier. Binance announces its ‘CR7’ collection of NFTs in partnership with Al Nassr Forward.
NFTs are virtual assets based on the blockchain technology that underpins cryptocurrencies like Bitcoin and can be bought and sold as investments.
These digital assets can be bought and traded online. It also came with entry into competitions with prizes – such as the chance to meet Ronaldo.
While NFTs were widely promoted as the future of fan engagement in football a year or two ago, the hype has largely died down as token prices have fallen.
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The lawsuit details how Ronaldo has repeatedly promoted not only his NFTs but also Binance in general on his social media pages, including last month.
What is Ronaldo accused of in the lawsuit?
The lawsuit claims that the “overarching purpose” of the partnership was for Ronaldo to help Binance successfully attract or attempt to attract investors into Binance’s crypto-related securities from Florida and across the country. It also notes that Binance is listed on Ronaldo’s personal website in the section titled “I work with brands I trust.”
Investors claim Ronaldo is responsible for losing their money because, they say, the fact that he was promoting his collaborative NFT collection with Binance led them to believe that other cryptos held on the platform The assets were safe and were not being invested in unregistered securities. Whereas, he claims, that was not the case. They say Ronaldo knew or should have known that by not disclosing how much he was being paid to promote Binance, he was engaged in “unfair and deceptive practices.”
He accused Ronaldo of a “relentless and aggressive” promotion and advertising campaign that was “incredibly successful” in signing up new users.
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“After news of Ronaldo’s newly minted NFT collection with Binance was publicly announced, online searches for NFT-related search terms increased by 500% in searches using the keyword ‘Binance,’” the lawsuit states. Percentage increase is also included. -level NFTs sold out within the first week”.
The lawsuit argues that once users signed up for Binance to access Ronaldo’s NFTs and related benefits, they were more likely to invest in Binance for other purposes. This involved purchasing cryptocurrency tokens that were not formally regulated by financial regulators. That’s why they are suing Ronaldo for $1 billion in damages.
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The lawsuit also says that, given Ronaldo’s vast financial resources to receive advice, “he knew or should have known of potential concerns about Binance selling unregistered crypto securities” that played a role in the fraud. Might be possible.
What are unregistered securities?
“Through his social media promotion, NFT collection, and other advertising activities, Mr. Ronaldo personally participated in and assisted Binance in the sale of unregistered securities,” the lawsuit says.
This concept of unregistered securities is a major part of the litigation.
The US Securities and Exchange Commission (SEC) says that assets like cryptocurrencies can be considered “securities” – financial assets that can be traded – and thus celebrities endorsing them must comply with US law.
On June 8, 2023, SEC Chairman Gary Gensler said that cryptocurrency tokens are “classic securities.”
This means that tokens generally need to be registered with authorities. This was not the case with Binance’s cryptocurrency products, which the plaintiffs allege were promoted after they found out about the platform through Ronaldo’s Instagram account.
“The evidence now shows that the Binance fraud was only able to reach such heights through the offering and selling of unregistered securities, with the assistance of some of the wealthiest, most powerful and recognized organizations and celebrities around the world, like the defendants.” From, Ronaldo,” the lawsuit says social media influencers like Ronaldo played a major role in the rise of Binance “by promoting these unregistered securities.”
Ronaldo playing for Al Nassr in Saudi Arabia (Yasser Bakhsh/Getty Images)
What will happen next?
Gemma Fleetwood, a lawyer specializing in digital assets at JMW Solicitors, says that now she has been informed of the court proceedings, Ronaldo will have the opportunity to respond.
“Ronaldo will likely discuss with his legal advisers whether the claim has legal merit, what his defense will be and whether he should make any offer to settle the case,” says Fleetwood.
“Given the level of damages claimed, it will be difficult for them to settle this matter at an early stage and therefore the matter may ultimately reach a trial where the parties will be required to give evidence publicly on the matter.”
Are there any other similar cases?
Basketball legend Shaquille O’Neal was accused in two separate lawsuits of promoting unregistered securities as part of a sponsorship deal with cryptocurrency exchange FTX.
Fleetwood says O’Neal and Ronaldo are not alone.
“Similar cases have been brought against music producer DJ Khaled as well as boxing legend Floyd Mayweather for failing to disclose payments received from promoting Initial Coin Offerings (ICOs),” she says. “Mayweather and Khalid previously settled those claims for approximately $750,000.
“Ronaldo may attempt to settle the claims brought against him in a similar manner to avoid public litigation, increased legal costs and the significant time required to prepare court filings.”
Former NBA star Shaquille O’Neal (Frazer Harrison/Getty Images)
What is the big picture?
Over the past few years, cryptocurrency companies have worked with several football players and clubs to promote their products. Insiders say this is because sports is considered the cheapest way to advertise worldwide to the young male demographic who are particularly interested in football and cryptocurrency.
Despite much hype when cryptocurrency prices began rising rapidly during the pandemic, making some people very rich very quickly, things are now looking much less rosy. The prices of the tokens have dropped and top clubs and players have seen the value of the tokens they promote decline.
Explained: How the crypto crash has affected every Premier League club
It is surprising that some football players are still promoting cryptocurrency products on their social media profiles. But two players are still doing so, Ronaldo and Lionel Messi, who have promoted several cryptocurrency companies in recent months, including. Given their success on the pitch, they are unlikely to need the money, but do so anyway.
These two people are the two most followed people on Instagram in the world.
While smaller players no longer promote cryptocurrencies due to serious damage to the industry’s reputation, two of the world’s most famous players are still doing so. There is no suggestion that Messi’s promotion is illegal, but anyone promoting crypto assets will be watching this case with interest to see what the US courts say about whether the company with which they have a relationship. To what extent can they be responsible for any wrongdoing done by him. Even if the product they are promoting is problem-free.
(Top photo: Yasser Bakhsh/Getty Images)