Portuguese football star Cristiano Ronaldo is embroiled in a class action lawsuit in the United States, stemming from his promotion of Binance, the world’s largest cryptocurrency exchange. The lawsuit centers on allegations that Ronaldo’s endorsement led to substantial investment losses, with damages sought exceeding $1 billion.
Ronaldo’s Role in Binance Promotion
In November 2022, Binance launched its inaugural “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. The footballer’s endorsement was aimed at rewarding his fans, but it also resulted in a dramatic increase in searches for Binance, indicating a significant influence on investor behavior. The value of the NFTs, initially priced at $77, plummeted to around $1 within a year, leading to considerable losses for investors.
Legal Implications
The lawsuit alleges Ronaldo’s involvement in promoting “unregistered securities” like Binance’s BNB cryptocurrency. The US Securities and Exchanges Commission (SEC) stipulates that such assets can be classified as securities, requiring endorsers to adhere to specific legal disclosures. The claimants assert that Ronaldo failed to disclose his compensation for the endorsement, a key point of contention in the case.
Regulatory Oversight and Celebrity Endorsements
The lawsuit against Ronaldo highlights the broader issue of celebrity endorsements in the cryptocurrency market, especially regarding compliance with regulatory frameworks. SEC chair Gary Gensler has emphasized the need for celebrities to disclose payment details when endorsing investment opportunities, including crypto-asset securities. The case against Ronaldo raises questions about the responsibilities of celebrities in financial promotions and the need for investor awareness.
Industry Reactions
Nigel Green, CEO of the DeVere Group, commented that focusing solely on Ronaldo oversimplifies a complex issue. He pointed to the slow response of global regulators in establishing clear guidelines for the evolving cryptocurrency landscape. Green’s statement underscores the need for a more comprehensive approach to regulation and oversight in the cryptocurrency sector.
Ronaldo and Binance’s Continued Partnership
Despite the lawsuit, Ronaldo and Binance seem to be planning future collaborations, as hinted at in a recent social media post by the football star. This ongoing partnership suggests a continued relationship despite the legal challenges.
Broader Legal Actions in the Crypto Sector
The lawsuit against Ronaldo and Binance is part of a wave of legal actions targeting major companies and celebrities over crypto promotions. Major League Baseball, Formula 1, and Mercedes-Benz are among those facing similar lawsuits related to the promotion of the now-defunct crypto-exchange FTX.
As the case progresses, it will likely have significant implications for celebrity endorsements in the financial sector, particularly concerning cryptocurrencies. The outcome could also influence how regulatory bodies and global financial markets approach the rapidly evolving digital currency landscape.
Also learn about Singapore’s MAS Implements New Crypto Regulations.
