Athletes and celebrities have been living dangerous relationships with cryptocurrency firms. Seduced by generous contracts, they have offered to promote markets and cryptocurrencies that operated on the edge of the law or that openly violated it. That has cost them fines and lawsuits. The last one was presented on Monday in Florida (United States) against the Saudi league footballer Cristiano Ronaldo for lending his image to the cryptocurrency 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 CEO of Binance a few months ago; Mikey Vongdara, from Florida, and Gordon Lewis, from Colorado. The three claim that they bought cryptocurrencies through the Binance market and now demand to be compensated for their losses. This is a collective lawsuit to which all injured parties who consider themselves to be in the same situation can join.
The plaintiffs are targeting Cristiano Ronaldo because he “promoted, assisted and/or actively participated in the offer and sale of unregistered securities in coordination with Binance.” The text points out that in 2022, the footballer entered into a multi-year partnership with Binance that involved the launch of his first collection of NFTs, initials of non-fungible tokensa 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. 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 for just one dollar. There were much more expensive NFTs of the footballer, up to a maximum 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 throughout the country, including in Florida,” says the text.
The lawsuit comes after Changpeng Zhao, the founder and boss 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 million dollars (about 4,000 million euros) for violating laws against money laundering and the regulation of securities markets. Additionally, in a federal court in Seattle (Washington), Zhao pleaded guilty to a crime and agreed to resign, but will be able to maintain shareholder control of the company. Binance is the world’s largest cryptocurrency exchange, responsible for approximately 60% of centralized cryptocurrency spot trading.
Celebrities
The legal action filed in 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 them into costly and unsafe investments. “Evidence now reveals that the Binance fraud was only able to reach such heights through the offer and sale of unregistered securities, with the willing help and assistance of some of the richest, most powerful and renowned organizations and celebrities in everyone, just like the accused Ronaldo”, the lawsuit says.
The lawsuit argues that once users had registered on Binance to access Ronaldo NFTs, they were more likely to invest on Binance for other purposes, including purchasing unregulated cryptocurrencies. For this reason, they are moving forward and suing Ronaldo for damages “for an amount exceeding 1 billion 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 or settled, it would end in a jury trial.
Last year, a series 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. The former player basketball Shaquille O’Neal also received two lawsuits in connection with FTX. The Securities and Exchange Commission (SEC) has fined 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 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 investing,” she said at the time. SEC Chairman Gary Gensler in a statement. “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 having promoted the TRX and BTT cryptocurrencies without revealing that they were paid for it. The supervisor considers that the vast majority of cryptocurrencies are tradable securities and that implies much stricter regulation.
In Spain, consumer associations have denounced misleading advertising carried out 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 advertising Binance on Twitter to his more than 25 million followers.
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