Why Cristiano Ronaldo is being sued in $1bn lawsuit by people who bought his NFTs

MECCA, SAUDI ARABIA - NOVEMBER 11: Cristiano Ronaldo of Al Nassr reacts during the
Saudi Pro League match between Al Wehda and Al-Nassr at King Abdul Aziz Sport
Stadium on November 11, 2023 in Mecca, Saudi Arabia. (Photo by Yasser Bakhsh/Getty
Images)
By Joey D'Urso
Nov 30, 2023
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Cristiano Ronaldo is facing a $1billion class action lawsuit in the U.S. after
promoting his non-fungible token (NFT) collaboration with cryptocurrency exchange
Binance on social media.

Binance has recently taken a hit to its reputation. Last week, Binance chief
executive Changpeng Zhao resigned from the company after pleading guilty to money
laundering violations. The United States’ justice department also said Binance
would be required to pay $4.3billion (£3.4bn) in penalties — and report suspicious
activity to federal authorities.

Last November, Ronaldo launched a collection of NFTs with the company, the cheapest
of which was priced at $77. One year later, this costs about $1. The plaintiffs are
suing the 38-year-old in Florida, claiming they made loss-making investments on the
back of his social media advertisements for Binance products.

The Athletic dug through the 130-page lawsuit to explain the claims against Ronaldo
and to analyse what it means for the wider issue of footballers promoting
controversial investments.

Cristiano Ronaldo’s representatives did not comment when contacted. Binance has
also been approached for comment.

What did Ronaldo do?

Ronaldo announced a tie-in with Binance in November 2022 but the lawsuit says the
deal was signed some months before. Binance announced its ‘CR7’ collection of NFTs
in partnership with the Al Nassr forward.

NFTs are virtual assets based on the blockchain technology that underpins
cryptocurrencies, such as Bitcoin, and can be bought and sold as investments.

These digital assets could be bought online and traded. Associated with this was
entry to competitions with prizes — such as the opportunity to meet Ronaldo.

While a year or two ago NFTs were widely touted as the future of fan engagement in
football, the hype has largely died off as token prices have plunged in value.

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The lawsuit explains how Ronaldo has repeatedly promoted not just his NFTs but also
Binance generally on his social media pages, including last month.

View this post on Instagram

A post shared by Cristiano Ronaldo (@cristiano)

What does the lawsuit accuse Ronaldo of?

The lawsuit claims the “overarching objective” of the partnership was for Ronaldo
“to help Binance successfully solicit or attempt to solicit investors in Binance’s
crypto-related securities from Florida and nationwide”. It also notes that Binance
is listed on Ronaldo’s personal website in a section called “I work with brands I
believe in”.

The investors claim Ronaldo is responsible for them losing their money because,
they say, the fact he was promoting his collaborative NFT collection with Binance
materially misled them into believing that other crypto assets held on the platform
were safe and were not being invested in unregistered securities when, they claim,
that was not the case. They say Ronaldo knew or ought to have known this and that
in promoting Binance, without disclosing how much he was being paid for doing so,
he engaged in “unfair and deceptive practices”.

They accuse Ronaldo of a “sustained and aggressive” promotion and advertising

campaign that was “incredibly successful” in signing up new users.

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“After the news of Ronaldo’s newly created NFT collection with Binance was publicly
announced, online searches for NFT-related search terms surged, including a 500 per
cent increase in searches using the keyword ‘Binance’,” the lawsuit says, adding
that “premium-level NFTs sold out within the first week”.

The lawsuit argues that once users had signed up for Binance to access Ronaldo’s
NFTs and associated benefits, they were more likely to invest in Binance for other
purposes. This included buying cryptocurrency tokens that were not formally
regulated by financial regulators. They are therefore suing Ronaldo for $1billion
in damages.

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The lawsuit also says that, given Ronaldo’s vast financial resources with which to
obtain advice, “he knew or should have known of potential concerns about Binance
selling unregistered crypto securities” that may have played a role in fraud.

What are unregistered securities?

The lawsuit says “through his social media promotions, NFT collection, and other
advertising activities, Mr Ronaldo personally participated in and aided Binance in
making the sale of unregistered securities”.

This concept of unregistered securities forms a major part of the lawsuit.

The U.S. Securities and Exchange Commission (SEC) says assets like cryptocurrencies
can be considered “securities” — financial assets that can be traded — and thus
celebrities endorsing them must follow U.S. law.

On June 8, 2023, Gary Gensler, chair of the SEC, said cryptocurrency tokens are
“classic securities”.
This means tokens must generally be registered with the authorities. This was not
the case for Binance’s cryptocurrency products, which the plaintiffs allege were
promoted to them after they were made aware of the platform when they came across
it via Ronaldo’s Instagram account.

“Evidence now reveals that Binance’s 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 wealthiest, most powerful and recognized organizations
and celebrities across the globe just like the defendant, Ronaldo,” the lawsuit
says, adding that social media influencers such as Ronaldo played a major role in
Binance’s rise by “hyping these unregistered securities”.

Ronaldo is playing in Saudi Arabia for Al Nassr (Yasser Bakhsh/Getty Images)

What will happen next?
Jemma Fleetwood, a digital asset specialist lawyer at JMW Solicitors, says that now
he has been served with court proceedings, Ronaldo will have the opportunity to
respond.

“Ronaldo will likely be discussing with his legal advisers whether the claim has
legal merit, what his defence will be and whether he should make an offer to settle
the case,” Fleetwood says.

“Given the level of damages claimed, it will likely be difficult for him to settle
this case at an early stage and so the matter could eventually reach a trial where
the parties would be required to publicly give evidence on the case.”

Are there any other similar cases?

Basketball legend Shaquille O’Neal was accused in two separate lawsuits of
promoting unregistered securities as part of a sponsorship deal with the
cryptocurrency exchange FTX.

Fleetwood says O’Neal and Ronaldo are not the only ones.

“There have been similar cases brought against boxing legend Floyd Mayweather,
along with music producer DJ Khaled, for failing to disclose payments received from
promoting initial coin offerings (ICOs),” she says. “Mayweather and Khaled
previously settled those claims for around $750,000.

“Ronaldo may similarly attempt to settle the claims brought against him to avoid a
public trial, the escalation of legal costs and significant time spent on preparing
court filings.”

Former NBA star Shaquille O’Neal (Frazer Harrison/Getty Images)

What is the bigger picture?
Over the past couple of years, cryptocurrency companies have worked with many
football players and clubs to promote their products. Insiders say this is because
the sport is seen as the cheapest way to advertise around the world to the young
male demographic, who tend to be particularly interested in football and
cryptocurrency.

Despite lots of hype when cryptocurrency prices started booming in the pandemic,
making some people rich very quickly, things look a lot less rosy now. Token prices
have plummeted and top clubs and players have seen tokens they promoted plunge in
value.

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It is striking that few footballers are still promoting cryptocurrency products on

their social media profiles. But two of the players still doing so are Ronaldo and
Lionel Messi, who has promoted multiple cryptocurrency companies — including in
recent months. They are unlikely to need the money, given their on-pitch success,
but do it anyway.

The two men are the two most followed people on Instagram in the world.

While lesser players no longer promote cryptocurrency, as the industry’s reputation

has taken a serious hit, the two most famous players in the world are still doing
so. There have been no suggestions Messi’s promotions are illegal, but anyone
promoting crypto assets will be watching this case with interest to see what the
U.S. courts say about to what extent they can be responsible for anything improper
done by a company with which they have links, even if the product they are
promoting is problem-free.