Christiano Ronaldo faces legal Challenges over Binance Promotion

2023-12-13, 05:46

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Several NFT investors are suing Christiano Ronaldo for promoting Binance NFTs.

The value of Ronaldo NFTs plunged from between $77 and $10,000 to around $1 within a year.

Tom Brady, Gisele Bundchen, Kardashian and Floyd Mayweather, Jr are other crypto celebrities who were sued for promoting digital assets like cryptocurrencies.

Keywords: Crypto celebrities, Binance lawsuit, Binance CEO, Binance Exchange, Binance problems, endorsing Binance NFTs, promoting Binance NFTs, SEC vs. Binance, Ronaldo NFT collection, Ronaldo NFT price
## Introduction
Many firms around the world use celebrities to promote their businesses and brands to attract many customers. Although that practice works well in the conventional business sector it has created challenges in the crypto sector.

Already, customers and regulatory authorities have sued several celebrities like Christiano Ronaldo, Tom Brady, Gisele Bundchen, Kardashian and Floyd Mayweather, Jr for promoting crypto businesses. 
 
Today, we focus on a recent class action lawsuit against Christiano Ronaldo for promoting Binance crypto exchange and its products. We will also discuss other lawsuits for prominent celebrities like Tom Brady and Gisele Bundchen. 
## Christiano Ronaldo Faces a Class-action Lawsuit for Promoting Binance 
Christiano Ronaldo, the Portuguese soccer star, is facing a $1 billion class-action lawsuit for promoting Binance, the world’s largest crypto exchange, and its products. The real legal case is that Ronaldo promoted unregistered securities which Binance offers to the public.

Related news: [Ronaldinho Denies Ties to Alleged Crypto Pyramid Scheme](https://www.gate.io/blog_detail/3196/ronaldinho-pyramid-scheme "Ronaldinho Denies Ties to Alleged Crypto Pyramid Scheme")
## The Class – action Against Ronaldo
Ronaldo’s class-action stems from his association with Binance where he has been promoting its non-fungible tokens ([NFTs](https://www.gate.io/learn/articles/what-are-nfts/4 "NFTs")). The lawsuit, filed in a U.S. district court in Florida, alleges that Ronaldo actively advertised securities which Binance offers which are, however, unregistered.

The [lawsuit](https://dockets.justia.com/docket/florida/flsdce/1:2023cv24481/658307 "lawsuit") purports that Ronaldo’s participation lured many investors to purchase Binance NFTs which are unregistered security instruments. Basically, the soccer star partnered Binance in November 2022 to promote its digital products, especially NFTs. One specific example of the unregistered securities is a collection of NFTs that have Ronaldo’s initials and shirt number, popularly known as Ronaldo NFTs.

The [CR7 (Ronaldo NFTs) comprises a range of products](https://www.binance.com/en/blog/nft/cristiano-ronaldo-the-nft-collection-5556607489226167192 "CR7 (Ronaldo NFTs) comprises a range of products") that include footwear and fragrances, aimed at elevating soccer in the digital realm. It has 7 animated statues showing Ronaldo’s iconic moments in his football career that include his bicycle-kick goals and his legendary stepover.

Each type had 777,777 NFTs. In addition there was a special offer for new Binance users who opened their accounts using Ronaldo’s code. Each of these investors was entitled to a “CR7 Mystery Box” with one special NFT.

At the time of their launch, the prices of the NFTs ranged between $77 and 10,000 each. However, their values plummeted to around $1 each after a one-year period, resulting in much loss for the investors. The plaintiffs accuse Ronaldo of making misleading statements when promoting these digital assets.

Further to this, the plaintiffs allege that Ronaldo has not divulged the compensation Binance gave him as the law stipulates. Also, the lawsuit emphasizes that through the advertisements Binance and Ronaldo targeted investors who were not well-conversed with such investment assets.

The allegations against Ronaldo are similar to the ones levelled against [Paul Pierce. In the case of Paul Pierce, an NBA player vs. SEC](https://www.sec.gov/news/press-release/2023-34 "Paul Pierce. In the case of Paul Pierce, an NBA player vs. SEC"), Gary Gensler, the regulatory authority chair, emphasized that making misleading statements about a security may result in a civil lawsuit. He also declared that any [celebrity who promotes a security like NFTs](https://www.gate.io/blog_detail/529/celebrities-that-have-entered-the-nft-world-like-owning-bayc "celebrity who promotes a security like NFTs") should make public the compensation he/she gets for doing that.

Gensler said, “This case is yet another reminder to celebrities: The law requires you to disclose to the public from whom and how much you are getting paid to promote investment in securities, and you can’t lie to investors when you tout a security."

In the same press release, [Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, said](https://www.sec.gov/news/press-release/2023-34 "Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, said"), "The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion."

He added that the "Investors are entitled to know whether a promoter of a security is unbiased."

Lastly, [Gensler also advised](https://www.sec.gov/news/press-release/2023-34 "Gensler also advised") to be vigilant when investing in digital assets which some celebrities endorse. [He said](https://www.sec.gov/news/press-release/2023-34 "He said"), "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."

Based on the above guidelines, from the SEC, the plaintiffs who include Michael Sizemore, Mikey Vongdara, and Gordon Lewis, are seeking compensation for the losses they incurred as well as legal fees.

As an instance, Ronaldo advertised the NFTs on his X profile which has more than 110 million followers. It is also important to note that Ronaldo also promoted Binance Coin (<a href="/price/bnb-bnb" target="_blank" class="blog_inner_link">BNB</a>). According to Coinpaprika, the lawsuit resulted in a 500% increase in searches for Binance, which might have contributed to much sales volume.

Posting on X, [Coinpaprika said](https://twitter.com/coinpaprika/status/1729760458939216347 "Coinpaprika said"), “Lawsuit filed against Cristiano Ronaldo for promoting Binance's unregistered securities, which sparked a 500% increase in searches for #Binance.”

Read also: [What are the Main NFT Collections?](https://www.gate.io/learn/articles/what-are-the-main-nft-collections/934 "What are the Main NFT Collections?")
## Are NFTs securities? 
We have discussed the class action lawsuit against Ronaldo who promoted Binance securities in the form of NFTs. This raises a question whether or not NFTs are securities. In fact, the U.S. Securities and Exchange Commission (SEC) classifies [non-fungible tokens as securities](https://www.gate.io/blog_detail/2708/sec-labels-37-cryptocurrencies-as-securities-implications-for-trading "non-fungible tokens as securities"). Therefore, the celebrities who advertise them should adhere to the country’s disclosure requirements. 
## Potential Consequences on Binance and Ronaldo
The class action lawsuit is likely to affect both Ronaldo and Binance in one or two ways. If found guilty Ronaldo may be forced to pay $1 billion in damages to the plaintiffs. The court may also request him to pay the associated legal costs.

Of course, Ronaldo’s reputation may be damaged to the extent that other businesses may avoid using him as their ambassador or promoter.

It is unlikely that Binance may incur costs arising from this litigation. For now, it seems most Binance problems related to securities and other issues were solved through the $4 billion settlement it had with various United States regulatory authorities.

The settlement followed Binance Exchange and Changpeng Zhao’s, the former Binance CEO, plea of guilty to Anti-Money Laundering laws violations and other charges.

Basically, the $4 billion is a settlement for Binance’s multiple criminal charges, meaning that the exchange is unlikely to face more legal issues arising from the past. However, the slew of lawsuits against Binance are likely to dent the exchange’s reputation. 
## Potential Effects of Ronaldo Class-Action Lawsuit on Binance Market Standing 
There is no doubt that Ronaldo’s class-action lawsuit may further damage Binance’s reputation, which affects its market standing. Already, Binance’s market share has decreased since the beginning of the year due to various legal disputes with the United States regulatory agencies like the SEC.

Binance’s market share has dropped significantly from its February 2023 position. A few months after the FTX collapse Binance’s trading volume was about 66% of the entire market. For example, in March 2023 the exchange recorded a high trading volume of [$559.8 billion](https://www.coingecko.com/research/publications/centralized-crypto-exchanges-market-share "$559.8 billion"). However, by the end of September its trading volume had decreased to $132.5 billion.

Similarly, its trading [volume dropped by about 30.3%](https://www.coingecko.com/research/publications/centralized-crypto-exchanges-market-share "volume dropped by about 30.3%") between August and September. The main cause of the decline are the regulatory challenges it has been facing during the year. Therefore, any further litigations against Binance may further threaten its market share. 
## Other Crypto Celebrities who Faced Lawsuits 
Ronaldo was not the first celebrity to face lawsuits for promoting crypto businesses. Crypto celebrities like Tom Brady, Gisele Bundchen, Kardashian and Floyd Mayweather, Jr were sued for promoting digital assets like cryptocurrencies and NFTs.

More specifically, In 2022 after the FTX collapse, several celebrities faced class-action lawsuits for promoting the exchange. For example, an investor sued Larry David, Gisele Bundchen and Tom Brady for promoting and endorsing the FTX exchange. One of the key allegations was that these celebrities did not properly disclose their relationships with the exchange. However, the celebrities moved to dismiss the case.

The other crypto celebrities who faced another lawsuit where Kardashian and Floyd Mayweather, Jr. In that case, the key allegation was that the celebrity promoters collaborated with the cryptocurrency EthereumMax executives to lure investors to purchase the EMax token which drove its price up.

In the end, EthereumMax executives sold the cryptocurrency at high values. The SEC charged Kardashian $1.26 million penalty which he agreed to pay.

Nevertheless, a Federal judge dismissed the case against Floyd Mayweather, Jr. on the grounds that there was no proof that the investors who bought the EMax token saw the promotions. Regarding promoting digital assets Charles Whitehead, professor at Cornell Law School, said that promoters should be cautious.

[In an interview with CNN Whitehead said](https://edition.cnn.com/2022/12/14/tech/celebrity-crypto-lawsuits/index.html "In an interview with CNN Whitehead said"), “Selling an asset that is a financial instrument … is not the same thing as selling sneakers.”

He added, “All these celebrities who are running around and doing these sorts of sponsorships should stop and ask a securities lawyer.”

In the end, these lawsuits have shown the regulatory challenges which crypto celebrities face when they promote digital assets, especially securities. 
## Conclusion 
Christiano Ronaldo is facing a $1 billion class action lawsuit in the United States for promoting and endorsing Binance products like NFTs which the SEC deems to be securities. The SEC claims that Binance has not registered them. On the other hand, the plaintiffs are suing Ronaldo for damages on the losses they incurred for investing in the Ronald NFT collection.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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