Athletes and celebrities have been living dangerous relationships with cryptocurrency firms. Seduced by generous contracts, they have lent themselves to promoting markets and cryptocurrencies that operated on the edge of the law or openly violated it. That has cost them fines and lawsuits. The latest was filed on Monday in Florida (United States) against Saudi league footballer Cristiano Ronaldo for lending his image to crypto giant Binance.
The 133-page lawsuit was filed in a Florida court. It is signed by Michael Sizemore, a California resident, who already sued the founder and chief executive of Binance a few months ago; Mikey Vongdara of Florida and Gordon Lewis of Colorado. The three claim that they bought cryptocurrencies through the Binance marketplace and are now claiming to be compensated for the losses. This is a class action lawsuit that can be joined by all injured parties who consider that they are in the same situation.
The plaintiffs are targeting Cristiano Ronaldo because he "actively promoted, assisted, and/or participated in the offering and sale of unregistered securities in coordination with Binance." The text notes that in 2022, the footballer entered into a multi-year partnership with Binance that involved the launch of his first collection of NFTs, initials for non-fungible tokens, a class of crypto assets.
The Portuguese footballer launched his CR7 NFT collection with Binance in November last year, ahead of the 2022 World Cup in Qatar. Their starting prices started at around $77 and featured animated images of Ronaldo at iconic moments in his life. That image sold for $77 is now trading at just $10. There were much more expensive NFTs of the footballer, up to a maximum of $000,<>.
Ronaldo was also a paid spokesperson for Binance as part of the crypto 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 statement said.
The lawsuit comes after Changpeng Zhao, the founder and head of Binance, reached an agreement with the Department of Justice, the Treasury and the Futures Exchange Commission (CFTC) to pay a record fine of $4.368 billion for violating anti-money laundering laws and securities market regulation. In addition, in federal court in Seattle, Washington, Zhao pleaded guilty to a crime and agreed to resign, but will be able to maintain shareholding control of the company. Binance is the world's largest cryptocurrency exchange, responsible for approximately 4% of centralized spot cryptocurrency trading.
The legal action filed in the federal court for the Southern District of Florida alleges that Ronaldo's promotion of Binance was "deceptive and unlawful." Binance's alliance with high-profile figures like Ronaldo, the plaintiffs claim, led to expensive and unsafe investments. "The evidence now reveals that Binance's fraud was only able to reach such heights through the offering and selling of unregistered securities, with the willing help and assistance of some of the richest, most powerful and most recognized organizations and celebrities around the world, just like defendant Ronaldo," the lawsuit reads.
The lawsuit argues that once users had registered with Binance to access Ronaldo's NFTs, they were more likely to invest in Binance for other purposes, including buying unregulated cryptocurrencies. For this reason, they are suing Ronaldo for damages "in an amount exceeding 1,000 million dollars, excluding interest and costs", according to the text, which does not quantify the specific damages of the initial plaintiffs.
If the case is not initially dismissed and a pre-trial settlement is reached, it would end up 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 in connection with FTX. The Securities and Exchange Commission (SEC) has issued several fines to celebrities for their hidden deals with cryptocurrency firms.
The supervisor fined Kim Kardashian $1.3 million in October 2022 for promoting a crypto asset offered by EthereumMax without disclosing the $250,000 payment she had received. In addition, the entrepreneur pledged not to advertise cryptocurrencies for three years. "Ms. Kardashian's case also serves as a reminder to celebrities and others that they are required by law to disclose to the public when and how much they are paid to promote investing in securities," SEC Chairman Gary Gensler said in a statement at the time. "This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it does not mean that those 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, after they promoted cryptocurrencies TRX and BTT without disclosing that they were paid to do so. The supervisor considers the vast majority of cryptocurrencies to be tradable securities and that implies much stricter regulation.
In Spain, consumer associations have denounced misleading advertising starring athletes and other celebrities and the National Securities Market Commission (CNMV) has taken action on the matter. The CNMV has publicly warned Spanish footballer Andrés Iniesta for advertising Binance on Twitter to his more than 25 million followers.
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