On November 27, a class action lawsuit was filed against famous footballer Cristiano Ronaldo for his partnership with Binance. He is accused of promoting the crypto exchange. The plaintiffs claim they suffered damages because Ronaldo actively participated in the offer and sale of unregistered securities in coordination with Binance. Now they are seeking damages, which exceed $1 billion.
The next day, Binance and Ronaldo announced their imminent next collaboration.
All this is happening against the backdrop of intense regulatory pressure on the exchange in the US, which you can read about in our article: What's the deal with Binance, and what are its chances to survive?
The story of Binance and Cristiano Ronaldo partnership: NFT collections and a lie detector
Back in June 2022, the footballer signed a multi-year partnership with the exchange to introduce football fans to the world of Web3 and NFT. Here are its main milestones:
In November 2022, Binance launched the NFT collection "The CR7", dedicated to Ronaldo's life journey. The all-time trading volume is nearly $970,000, and the floor price currently stands at $1.3.
On July 3 of this year, the second collection called "Forever CR7: The GOAT" was launched, dedicated to the footballer's goals. Its bidding volume is much lower, only about $145,000, but the floor price is $22.
In September, Binance released a promo video, with Ronaldo answering questions under a lie detector.
In this video, among other things, the footballer mentioned that he owns NFTs and plans to release new collections in the future.
According to the lawsuit, the partnership with the football star, who has "over 849 million followers across Facebook, Instagram and Twitter", has paid off. After the announcement of the first NFT collection, online searches for the word "Binance" increased by 500%.
Details of the lawsuit: how Ronaldo was promoting unregistered securities for Binance
On November 27, a class action lawsuit was filed against Cristiano Ronaldo for his partnership with Binance. Amusingly, the next day, Binance and Ronaldo announced their imminent next collaboration.
The lawsuit in the US District Court for the Southern District of Florida is a detailed 129-page file. We have collected a few highlights:
1️⃣ The lawsuit is filed by three US citizens. They claim they suffered losses on investments in assets listed on Binance, because Ronaldo's advertisements misled investors. Those are Michael Sizemore, Mikey Vongdara, and Gordon Lewis.
2️⃣ Ronaldo’s advertisement made people invest in unregistered securities. The lawsuit mentioned that Ronaldo's partnership with Binance has attracted millions of followers, fans, and supporters who were induced to invest not only in the footballer's NFT collections but also in other unregistered securities available on Binance.
Whether crypto is a security or a commodity is acute in the US because it depends on how and by whom this sphere will be regulated. Read more in our article: Crypto: security or commodity?
3️⃣ The tokens mentioned in the context of unregistered securities are SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, COTI, as well as Binance’s BNB and BUSD. Many of these are often cited in similar cases, such as the SEC's recent lawsuit against Kraken.
4️⃣ Citizens blame Ronaldo for not complying with SEC rules. The lawsuit cites Commission's guidance that requires celebrities to disclose payments received for promoting crypto. The plaintiffs allege that the footballer failed to do so.
Notably, the NFT collections themselves are not called securities in the suit, although there have been similar precedents. Here are two cases: The SEC says Impact Theory's NFTs are securities; the SEC calls Stoner Cats NFTs unregistered securities.
As a result, the plaintiffs are seeking damages and legal fees from Ronaldo. The text states that this is a lawsuit for more than $1 billion, but the figure may become different at the end of the proceedings. Anyway, this is just a filing of the lawsuit; the court may dismiss it.
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