By Frank Kamuntu
Footballer Cristiano Ronaldo is facing a class action lawsuit in the US over his promotion of Binance, the largest cryptocurrency exchange in the world.
The plaintiffs claim his endorsement led them to make loss-making investments.
They are seeking damages of “a sum exceeding” $1bn (£790m).
In November 2022, Binance announced its first “CR7” collection of non-fungible tokens (NFTs) in partnership with Ronaldo, which the footballer said would reward fans “for all the years of support”.
NFTs are virtual assets that can be bought and sold, but which have no real-world form of their own – in other words they only exist digitally. Generally, they are used to mark ownership of something, such as a picture or video online.
“CR7” refers to Ronaldo’s initials and shirt number, and is used as branding in a range of products, from footwear to fragrances, that have helped make him one of the wealthiest athletes on earth.
In a social media video announcing the partnership, Ronaldo told would-be investors “we are going to change the NFT game and take football to the next level”.
The cheapest NFT from the collection was priced at $77 when it went on sale in November 2022 – but one year later, it was priced at about $1.
The claimants allege that Ronaldo’s promotion of Binance led to a “500% increase in searches” for the crypto exchange, which is registered in the Cayman Islands.
They also say it led people to use the firm to invest in what they call “unregistered securities” – such as Binance’s BNB cryptocurrency.
According to the US Securities and Exchanges Commission (SEC), these assets can be considered securities – and so celebrities endorsing them must follow US law.
SEC chair Gary Gensler previously said celebrities must “disclose to the public from whom and how much you are getting paid to promote investment in securities”.
“When celebrities endorse investment opportunities, including crypto-asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements,” he said.
The claimants allege Ronaldo should have disclosed how much he was being paid, but did not.
Nigel Green, boss of consultancy firm DeVere Group, said the problems at the heart of the case went wider than just one footballer.
“It is crucial to recognize that blaming Ronaldo alone oversimplifies a complex issue,” he said.
“Instead, attention should also be directed towards global regulators who have been slow to establish clear guidelines for this evolving financial landscape.”
Future Plans
Ronaldo and Binance appear to have plans to work together again in the future, with a recent social media post from the footballer saying they are “cooking something up”.
Neither have responded to the BBC’s requests for comment.
The class action suit was filed a week after the US Justice Department told the firm to pay $4.3bn (£3.4bn) in penalties and forfeitures.
It accused Binance of helping users bypass sanctions around the world, and of making it easy for criminals and terrorists to move money.
Its chief executive, Changpeng Zhao, resigned from the firm, having admitted money-laundering violations.
Major League Baseball, Formula 1 and Mercedes-Benz are all also facing class action lawsuits filed on the same day over their promotion of failed crypto-exchange FTX.
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