Cristiano Ronaldo, the renowned footballer, is currently entangled in a class action lawsuit within the United States concerning his association with Binance, the world’s largest cryptocurrency exchange.
The plaintiffs argue that Ronaldo’s endorsement of Binance played a pivotal role in their decision to engage in investments that ultimately incurred losses. Their pursuit of justice manifests in a demand for damages surpassing the substantial sum of $1 billion (£790 million).
Efforts to obtain comments from both Ronaldo’s management company and Binance have been initiated by the BBC.
In November 2022, Binance introduced its inaugural “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. The footballer expressed that these NFTs were designed to appreciate and reward fans for their unwavering support throughout the years.
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 recognise 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.”
Ronaldo and Binance hint at a future collaboration, as indicated by a recent social media post by the footballer, teasing that they are actively working on something together.
Despite the BBC’s requests for comment, neither Ronaldo nor Binance has responded.
The class action lawsuit was initiated a week following the US Justice Department’s directive for the firm to pay $4.3 billion (£3.4 billion) in penalties and forfeitures.
The lawsuit alleges that Binance facilitated users in circumventing global sanctions and provided an easy avenue for criminals and terrorists to transfer funds. Changpeng Zhao, the CEO, resigned, acknowledging money-laundering violations.
On the same day, Major League Baseball, Formula 1, and Mercedes-Benz also found themselves facing class action lawsuits for their involvement in promoting the failed crypto-exchange FTX.
