Cristiano Ronaldo is currently facing a $1 billion (£790 million) class action lawsuit in the United States filed by Michael Sizemore, Mikey Vongdara, and Gordon Lewis, in association to Ronaldo's promotion of Binance, the world's largest cryptocurrency exchange.
The lawsuit in the United States District Court alleges that Ronaldo's involvement resulted in financial losses and damages exceeding $1 billion. The filed complaint alleges that Ronaldo, in collaboration with Binance, participated in the offer and sale of unregistered securities, using celebrity partnerships to create a false sense of security for cryptocurrency transactions.
In mid-2022, Ronaldo entered a multi-year partnership with Binance. Binance introduced its first "CR7" collection of non-fungible tokens (NFTs) in collaboration with Ronaldo. Cristiano Ronaldo, through the "CR7" branding, has given his name to various products, contributing to his status as one of the wealthiest athletes globally.
The complaint also alleges that Ronaldo's promotion of the cheapest NFT in the collection, initially priced at $77 in November 2022, dropped to about $1 a year later, that Ronaldo's promotion of Binance caused a "500% increase in searches" for the crypto exchange and encouraging people to invest in "unregistered securities," including Binance's BNB cryptocurrency.
This legal challenge comes amidst Binance CEO Changpeng Zhao is stepping down after the company pleaded guilty to extensive US money laundering violations, resulting in fines exceeding $4 billion.
Zhao faced increased scrutiny as Binance came under investigation for various violations, including transactions involving militant groups like the Islamic State. On Tuesday, Zhao and Binance pleaded guilty to these charges, with the firm agreeing to substantial penalties. Zhao resigned as CEO and is prohibited from further involvement in the company, awaiting sentencing. Forbes currently lists his net worth at $10.2 billion as of Wednesday.
According to the US Securities and Exchange Commission (SEC), these assets may be considered securities, necessitating compliance with US law by celebrities endorsing them. SEC chair Gary Gensler emphasized the importance of celebrities disclosing their compensation for promoting investment in securities, urging investors to thoroughly research such endorsements.
In a social media video from the previous year, Ronaldo expressed his ambition to "change the NFT game and take football to the next level," a statement that claimants argue should have included disclosure of his earnings.
The issues extend beyond Ronaldo, calling for attention to global regulators' slow to establish clear guidelines in the evolving financial landscape, Nigel Green, head of consultancy firm DeVere Group, suggests.
Despite the ongoing legal challenges, Ronaldo and Binance seem to have future collaborations in the works, Ronaldo hinted at ongoing collaboration with Binance in a recent social media post, stating they were "cooking something up."
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