Cristiano Ronaldo accused in US$1bn class action lawsuit over Binance promotion

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2nd December 2023 – (New York) Cristiano Ronaldo, the world-renowned footballer, is facing a class-action lawsuit in the United States, tied to his promotion of Binance, the world’s largest cryptocurrency exchange.

The plaintiffs contend that Ronaldo’s endorsement influenced them to make investments that resulted in significant losses. They are seeking damages exceeding $1 billion (£790 million).

Both Ronaldo’s management company and Binance have been approached by the BBC for statements.

In November 2022, Binance unveiled its inaugural “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. Ronaldo stated that the initiative was intended to reward his fans “for all the years of support”.

NFTs are digital assets that can be bought, sold, and owned, but they lack a tangible, real-world form. They are typically used to signify ownership of a digital item, such as an image or video.

The term “CR7” combines Ronaldo’s initials and jersey number, serving as a brand for a variety of products, including footwear and fragrances, contributing to his status as one of the wealthiest athletes globally.

In a video on social media announcing the partnership, Ronaldo informed potential investors that “we are going to change the NFT game and take football to the next level”. The least expensive NFT from the collection was initially marketed at $77 in November 2022. However, its value plummeted to roughly $1 a year later.

The plaintiffs allege that Ronaldo’s endorsement sparked a 500% uptick in search queries for Binance, a crypto exchange registered in the Cayman Islands. They argue that his endorsement encouraged individuals to invest in what they term “unregistered securities”, including Binance’s BNB cryptocurrency.

The U.S. Securities and Exchanges Commission (SEC) considers such assets as securities, and hence, celebrity endorsements must adhere to US regulations.

Gary Gensler, SEC chair, has previously stated that celebrities must publicly disclose who is paying them and the amount they receive for promoting securities investments.

Gensler emphasised that when celebrities endorse investment opportunities, including crypto-asset securities, investors should diligently research whether the investments align with their financial goals and understand the reasons behind the celebrity endorsements.

The claimants allege that Ronaldo failed to disclose his compensation for the endorsement.

Nigel Green, the chief executive of consultancy firm DeVere Group, stated that the issues underlying the case extend beyond a single footballer. Green emphasised the importance of addressing the slow response of global regulators in establishing clear guidelines for this rapidly evolving financial landscape, rather than blaming Ronaldo solely.

Ronaldo and Binance appear to have plans for further collaborations, as indicated by a recent social media post from the footballer hinting that they are “cooking something up”.