Footballer Cristiano Ronaldo is facing a class action lawsuit in the US over his promotion of Binance, the world’s largest cryptocurrency exchange.
The plaintiffs allege that Ronaldo’s endorsement resulted in them making unprofitable investments, and they are seeking damages exceeding $1 billion (£790 million).
The BBC has reached out to both Ronaldo’s management company and Binance for comments.
In November 2022, Binance introduced its inaugural “CR7” collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. The footballer expressed that these NFTs would serve as a reward for fans who have supported him over the years.
NFTs are digital assets with no physical existence, representing ownership of online content such as images or videos.
Ronaldo’s “CR7” branding, derived from his initials and shirt number, is widely used in various products, contributing to his status as one of the world’s wealthiest athletes, ranging from footwear to fragrances.
In a social media video announcing the collaboration, Ronaldo stated, “We are going to change the NFT game and take football to the next level.”
The cheapest NFT from the collection initially sold for $77 in November 2022, but its value had dropped to around $1 a year later.
The claimants assert that Ronaldo’s endorsement of Binance resulted in a “500% increase in searches” for the cryptocurrency exchange, which is registered in the Cayman Islands.
They also contend that this promotion led individuals to use the platform for investing in what they describe as “unregistered securities,” including Binance’s BNB cryptocurrency.
As per the US Securities and Exchange Commission (SEC), these assets may be considered securities, and therefore, celebrities endorsing them are required to adhere to US law.
SEC chair Gary Gensler has previously emphasized that 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.”
Future plans
Ronaldo and Binance seem to have future collaborative plans, as indicated by a recent social media post from the footballer mentioning that they are “cooking something up.”
Neither Ronaldo nor Binance has responded to the BBC’s requests for comment.
The filing of the class action lawsuit occurred a week after the US Justice Department directed Binance to pay $4.3 billion (£3.4 billion) in penalties and forfeitures.
The department accused Binance of aiding users in circumventing global sanctions and facilitating the movement of money for criminals and terrorists. Following admissions of money laundering violations, Binance’s CEO, Changpeng Zhao, resigned from the company.
On the same day, Major League Baseball, Formula 1, and Mercedes-Benz also faced class action lawsuits related to their promotion of the failed crypto exchange FTX.