Recently, Cristiano Ronaldo has been subject to legal action for advertising Binance and unregistered securities.
Specifically, it is argued that the NFTs linked to Binance by the football celebrity have incentivized investments in unregistered securities on the cryptocurrency platform.
Let’s see below all the details.
Ronaldo sued for endorsing Binance and unauthorized investments
As anticipated, the well-known professional footballer Cristiano Ronaldo is at the center of a proposal for a class action lawsuit by individuals who claim to have suffered losses due to his promotion of the cryptocurrency exchange Binance, now involved in legal proceedings.
Specifically, a document presented on November 27th at a district court in the United States in Florida claims that Ronaldo:
“has promoted, assisted and/or actively participated in the offering and sale of unregistered securities in collaboration with Binance.”
We remind you that, during 2022, Ronaldo has signed a multi-year partnership with Binance to promote various collections of non-fungible tokens (NFTs), of which at least three are directly linked to Binance.
The accusation claims that those who acquired Ronaldo’s NFTs were inclined to use Binance for other activities, including investing in unregistered securities, such as Binance’s BNB and its cryptocurrency yield programs.
Ronaldo’s promotions, the complaint states, have encouraged Binance to solicit investments in unregistered securities, influencing millions of his followers to invest through the platform.
We underline that Ronaldo, thanks to his vast influence with 850 million followers on social media, is considered a key figure in the success of Binance, with a 500% increase in searches on the platform the week following the initial sale of NFTs.
The accusation against Cristiano Ronaldo and the legal controversies of the exchange with the SEC
Specifically, the lawsuit claims that Ronaldo, having investment experience and significant resources to obtain external advice, should have been aware that Binance was selling unregistered crypto securities.
In addition, Ronaldo is accused of not having complied with the guidelines of the United States Securities and Exchange Commission (SEC), which require disclosure of payments received for promoting cryptocurrencies.
The plaintiffs, Michael Sizemore, Mikey Vongdara, and Gordon Lewis, seek damages and legal expenses coverage through the class action.
Meanwhile, as we know, Binance and its founder Changpeng “CZ” Zhao are facing their own legal controversies, pleading guilty and paying a compensation of 4.3 billion dollars for violations of anti-money laundering laws and unregistered money transfer activities.
In addition, Zhao has resigned as CEO, risking up to eighteen months in prison, while Binance has agreed to up to five years of compliance monitoring by US authorities.
The SEC has also sued Binance for selling unregistered securities and is investigating alleged improper practices towards customer funds.
The SEC investigation into Binance US: possible parallels with FTX?
Recently, the SEC has intensified its investigations into Binance US following the Department of Justice’s accusations against Binance and former CEO Changpeng Zhao.
The ongoing lawsuit claims that client funds have been put at risk, and the SEC, following the agreement with the DOJ regarding Binance, is seeking to strengthen its case by looking for similarities with the investigation on FTX.
In detail, the SEC is examining evidence suggesting that Binance US has granted CZ a pathway to control assets, evoking concerns that emerged regarding Sam Bankman-Fried of FTX.
Despite the SEC’s claims of potential fraud, there is currently a lack of concrete evidence. However, the recent investigation by the Department of Justice into Binance could give momentum to the SEC’s efforts.
Anyway, the SEC’s intensified investigation into potential fraud at Binance US could have serious consequences, leading to possible legal actions and financial sanctions.
The current monitoring could indeed undermine the trust of users and investors, risking a decrease in the platform’s user base.
In addition, negative advertising and legal challenges could damage Binance’s reputation and influence the broader regulatory context.
Currently, trading volumes on Binance US are significantly declining and show no signs of recovery yet. On the other hand, trading volumes on Binance globally do not seem to be affected at the moment.
