In legal news, a class action lawsuit has been filed against famous footballer Cristiano Ronaldo in the United States in relation to his endorsement of Binance, the preeminent global cryptocurrency exchange.
Plaintiffs assert that his endorsement induced them to invest in losers, and demand damages in the amount of "a sum exceeding" $1 billion.
In November 2022, Binance and Ronaldo jointly unveiled their inaugural "CR7" collection of NFT’s. The footballer expressed that the collection would be a token of appreciation "for all the years of support" from his supporters.
NFT’s, or Non-fungible tokens, are tradable virtual assets that reside solely in the digital realm and lack any physical manifestation. In general, they are employed to indicate possession of digital media, such as photographs or videos.
The use of the initials and uniform number "CR7" as branding on a variety of products, including fragrances and footwear, has contributed to Ronaldo becoming one of the wealthiest athletes in the world.
Ronaldo informed prospective investors in a social media video announcing the partnership,
"We are going to revolutionize the NFT game and elevate football to the next level."
When it went on sale in November 2022, the least expensive NFT in the collection cost $77; by November 2023, it had decreased in price to approximately $1.
The claimants assert that the Cayman Islands-based cryptocurrency exchange Binance experienced a "500% increase in searches" as a result of Ronaldo's promotion of the platform. Additionally, they claim that it encouraged individuals to invest in "unregistered securities" through the firm, including Binance's BNB cryptocurrency.
These assets may be deemed securities by the US Securities and Exchanges Commission (SEC); therefore, celebrities endorsing them are required to comply with US law.
Gary Gensler, chairman of the SEC, has previously stated that personalities should "disclose to the public who they are compensated by and how much they earn to promote investments 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,"
The claimants assert that Ronaldo failed to disclose his compensation despite being required to do so.
Nigel Green, the chief executive officer of the consulting firm DeVere Group, stated that the issues at issue pervaded more than a single footballer. "It is crucial to recognise that blaming Ronaldo alone oversimplifies a complex issue," according to him.
"Instead, attention should also be directed towards global regulators who have been slow to establish clear guidelines for this evolving financial landscape."
Based on a recent social media post by the footballer, it appears that Ronaldo and Binance are "cooking something up" in preparation for a future collaboration. Both have yet to provide a response to Crypto Market Today’s inquiries for comment.
One week after the US Justice Department ordered the company to pay $4.3 billion in penalties and forfeitures, the class action lawsuit was initiated.
It accused Binance of facilitating the transfer of funds by criminals and terrorists and of aiding users in circumventing sanctions around the globe.
The firm's chief executive, Changpeng Zhao, tendered his resignation subsequent to his admission of misconduct in money laundering.
On the same day, class action lawsuits were filed against Major League Baseball, Formula 1, and Mercedes-Benz for their promotion of the defunct cryptocurrency exchange FTX.