Soccer superstar Cristiano Ronaldo is now at the center of a $1 billion class action lawsuit for his involvement in promoting Binance, the largest cryptocurrency exchange in the world. The lawsuit, filed in a Florida court on Tuesday, alleges that Ronaldo actively participated in the sale of unregistered securities through Binance, including the selling of non-fungible tokens (NFTs) featuring himself. This, according to the lawsuit, resulted in substantial financial losses for investors.
At this time, Binance has not responded to CNN's request for comment, while a representative for Ronaldo has declined to provide any comment on the matter. In November 2022, Ronaldo partnered with Binance to sell unique NFTs that depicted iconic moments from his career. The launch of these NFTs received significant attention, including prominent promotion on Ronaldo's social media platforms.
NFTs have gained mainstream popularity as they transform digital artworks and collectibles into unique and verifiable assets, facilitating easy trading on the blockchain. However, the lawsuit accuses Ronaldo of making deceptive statements and allowing his name and likeness to be associated with Binance's deceptive marketing practices, particularly with the sale of unregistered cryptocurrency securities known for their notorious volatility.
Furthermore, the plaintiffs argue that Ronaldo failed to disclose the form and amount of compensation received from Binance, as required by US law. They claim that both Binance and Ronaldo were well aware that their advertisements targeted individuals who were unfamiliar with cryptocurrencies.
The lawsuit mentions the statement made by Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), who emphasized the importance of celebrities disclosing their financial arrangements when promoting investments. The lawsuit points out that Kim Kardashian was fined over $1 million by the SEC for a similar issue.
The class action lawsuit seeks damages exceeding $1 billion. Interestingly, despite the ongoing litigation, Ronaldo continues to promote Binance, even posting a Binance advertisement on his social media accounts as recently as November 28th, reaching an audience of 110 million followers.
Ronaldo is not the first celebrity to face legal action over cryptocurrency endorsements. Tom Brady, Gisele Bundchen, and others were sued last year by an investor in the now-defunct crypto platform FTX for allegedly failing to disclose their involvement with digital financial institutions. Kardashian and Floyd Mayweather Jr. also faced a similar lawsuit in early 2021, accusing them of scheming with cryptocurrency executives to attract investors.
Promoting cryptocurrency involves different legal implications compared to endorsing regular consumer products. Selling a financial instrument like a cryptocurrency is not the same as selling athletic wear or beverage products. Legal experts have cautioned celebrities engaging in these types of sponsorships to consult with securities lawyers to avoid regulatory issues.
Binance, in addition to its association with Ronaldo, has faced its own share of problems. Just last week, the company agreed to pay over $4 billion in penalties and fines. The founder, Changpeng Zhao, stepped down as CEO, agreed to pay $200 million in fines, and faced allegations that Binance allowed illicit activities on its platform, including transactions related to child exploitation and terrorism financing. Zhao, facing potential imprisonment, admitted to his mistakes and expressed his commitment to accepting responsibility.
The legal action against Ronaldo and Binance underscores the growing scrutiny and regulatory challenges faced by celebrities and cryptocurrency platforms in the ever-evolving landscape of digital assets.