Football icon Cristiano Ronaldo is facing a class action lawsuit in the United States regarding his association with Binance. The plaintiffs contend that Ronaldo’s endorsement persuaded them to engage in investments that ultimately incurred losses, and they are seeking damages exceeding $1 billion.
In November 2022, Binance launched its first “CR7” collection of NFTs, a partnership with Ronaldo aimed at rewarding fans for their longstanding support. NFTs, essentially digital assets devoid of tangible existence, are commonly employed to signify ownership of digital content such as videos and images. CR7 is emblematic of Ronaldo’s initials and jersey number, and it serves as branding across a variety of products, ranging from fragrances to footwear, contributing significantly to Ronaldo’s position as one of the world’s wealthiest athletes.
The collection’s cheapest NFT, initially priced at $77 during the November launch, saw a dramatic drop to around $1 a year later, causing discontent among investors. The claimants argue that Ronaldo’s endorsement of Binance triggered a substantial 500% surge in searches for the crypto exchange based in the Cayman Islands. This surge, they claim, led people to utilize the platform for investments in what they deem “unregistered securities,” such as Binance’s BNB crypto.
The U.S. Securities and Exchange Commission (SEC) classifies such assets as securities and requires celebrities promoting them to conform with United States law. SEC chair Gary Gensler also stated that celebrities should disclose their compensations when promoting investment opportunities such as digital asset securities. The plaintiffs argue that Ronaldo didn’t disclose the extent of his compensation for endorsing Binance.
DeVere Group CEO Nigel Green states that attributing blame solely to Ronaldo oversimplifies the broader issue. He argues that global authorities should act immediately to set down precise rules for negotiating in the constantly changing financial environment.
Despite the legal turmoil, Ronaldo recently hinted on social media that he and Binance were working on something together, suggesting that they may collaborate in the future.
The class-action suit was filed shortly after the United States Department of Justice (DOJ) directed the exchange to pay $4.3 billion in forfeitures and penalties, accusing the platform of assisting users in evading international sanctions and facilitating illicit money transfers. Binance’s CEO, CZ, also recently resigned, acknowledging money-laundering violations.
Simultaneously, other major entities such as Formula 1, Mercedes-Benz and Major League Baseball face lawsuits filed on the same day, centering around their endorsement of the beleaguered cryptocurrency exchange FTX.
Industry actors such as Canaan Inc. (NASDAQ: CAN) will be watching how these lawsuits pan out in case they have major implications upon the future of the crypto space.
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