Athletes and celebrities have dangerous relationships with cryptocurrency companies. Seduced by generous contracts, they have offered to promote markets and cryptocurrencies that operated on the fringes of the law or openly violated it. That cost them fines and lawsuits. The latest lawsuit was announced on Monday in Florida (USA) against Saudi league footballer Cristiano Ronaldo for lending his image to cryptocurrency giant Binance.
The 133-page lawsuit was filed in a Florida court. It is signed by Michael Sizemore, a California resident who sued the founder and CEO of Binance a few months ago; Mikey Vongdara from Florida and Gordon Lewis from Colorado. The three claim they purchased cryptocurrencies through the Binance market and are now demanding compensation for their losses. This is a class action lawsuit that all injured parties who find themselves in the same situation can join.
The plaintiffs are targeting Cristiano Ronaldo for “promoting, supporting and/or actively participating in the offering and sale of unregistered securities in coordination with Binance.” The text states that the footballer entered into a multi-year partnership with Binance in 2022, which included the launch of his first collection of NFTs, initials for non-fungible tokens, a class of cryptoassets.
The Portuguese footballer launched his CR7 NFT collection with Binance in November last year ahead of the 2022 World Cup in Qatar. Starting prices started at around $77 and included animated images of Ronaldo in iconic moments of his life. The painting, which sold for $77, is now trading for just one dollar. There were much more expensive NFTs of the football player, reaching a maximum value of $10,000.
Ronaldo was also a paid spokesperson for Binance as part of the cryptocurrency market’s global advertising campaign. “Mr. Ronaldo’s promotions were posted on public websites, television and social media accounts accessible to plaintiffs across the country, including in Florida,” the text said.
The lawsuit comes after Changpeng Zhao, the founder and boss of Binance, reached an agreement with the Justice Department, the Treasury Department and the Futures Exchange Commission (CFTC) to pay a record fine of $4,368 million (around €4,000 million) for the violation Laws against money laundering and the regulation of securities markets. In addition, Zhao pleaded guilty in federal court in Seattle, Washington, to a felony and agreed to resign but can retain shareholder control of the company. Binance is the world’s largest cryptocurrency exchange and is responsible for approximately 60% of centralized cryptocurrency spot trading.
Celebrities
The lawsuit, filed in federal court for the Southern District of Florida, alleges that Ronaldo’s promotion of Binance was “fraudulent and unlawful.” Binance’s alliance with high-profile figures like Ronaldo, the plaintiffs claim, led them to make costly and unsafe investments. “The evidence now shows that the Binance fraud was only able to reach such heights by offering and selling unregistered securities, with the willing help and support of some of the richest, most powerful and most prestigious organizations and celebrities of all time, just like the defendant Ronaldo .”,” the lawsuit says.
The lawsuit argues that once users registered with Binance to access Ronaldo NFTs, they became more inclined to invest on Binance for other purposes, including purchasing unregulated cryptocurrencies. For this reason, they are going further and suing Ronaldo for damages “in excess of a billion dollars, excluding interest and costs,” says the text, which does not quantify the specific damages awarded to the original plaintiffs.
If the case is not initially dismissed or settled, it would end in a jury trial.
Last year, a number of Hollywood and sports stars, including Larry David and Tom Brady, were included in a class action lawsuit against FTX, which was the second-largest cryptocurrency exchange before its collapse in November 2022. Former basketball player Shaquille O’Neal also received two lawsuits related to FTX. The Securities and Exchange Commission (SEC) has fined celebrities for their hidden dealings with cryptocurrency firms.
The regulator fined Kim Kardashian $1.3 million in October 2022 for promoting a crypto asset offered by EthereumMax without disclosing the $250,000 payment she received. In addition, the businesswoman promised not to advertise cryptocurrencies for three years. “Ms. Kardashian’s case also serves to remind celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote securities investments,” SEC Chairman Gary Gensler said at the time an explanation. “This case is a reminder that celebrity or influencer endorsement of investment opportunities, including crypto asset securities, does not mean that these investment products are suitable for all investors,” he added.
In March, the SEC also fined actress Lindsay Lohan, YouTuber Jake Paul, rapper Soulja Boy and porn actress Kendra Lust, among others, for promoting the cryptocurrencies TRX and BTT without disclosing that they were paid to do so. The regulator believes that the vast majority of cryptocurrencies are tradable securities, which implies significantly stricter regulation.
In Spain, consumer associations have denounced misleading advertising by athletes and other celebrities and the National Securities Market Commission (CNMV) has taken action on the matter. The CNMV publicly warned Spanish footballer Andrés Iniesta for promoting Binance on Twitter to his more than 25 million followers.
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