In early May, football star Cristiano Ronaldo’s motion to dismiss a $1 billion class action lawsuit over his promotion of non-fungible tokens (NFTs) on Binance was denied by Judge Roy Altman. The lawsuit, brought by investors in November 2023, alleges that Ronaldo’s promotion of the CR7 NFT collection was deceptive and led to costly investment decisions. The collection features digital collectibles of Ronaldo and moments from his sports career, with Ronaldo promoting it as a symbol of innovation, artistry, and fan engagement. The lawsuit claims that since the launch of the collection, Ethereum-based NFT mints and trading volume have decreased alongside floor prices.
Ronaldo’s promotional activities for Binance included posts on his Instagram account, such as playing foosball with another athlete sponsored by the exchange. In a post in January, Ronaldo mentioned the “next level of fan experience” with Binance and the rarest NFT holders getting a chance to meet and train with him. The lawsuit alleges that Binance’s success was bolstered by celebrities like Ronaldo promoting unregistered securities, sparking a 500% increase in Google searches for “Binance” following Ronaldo’s partnership announcement. His premium NFTs sold out within a week of launch, contributing to the alleged fraudulent practices by Binance.
The judge’s denial of Ronaldo’s motion to dismiss the lawsuit directs the Clerk of Court to close and stay the case until pending motions for arbitration in a related action are adjudicated. Arbitration is a private form of dispute resolution where a neutral third party makes a final decision on the case outside of the court system. This development puts Ronaldo in a challenging position as he faces the $1 billion class action lawsuit over his promotional activities for Binance and the CR7 NFT collection. The outcome of the arbitration process and potential court proceedings will determine the next steps in the legal battle between Ronaldo, investors, and Binance.
Ronaldo’s collaboration with Binance on the CR7 NFT collection has sparked controversy and legal challenges, with prosecutors alleging deceptive and unlawful promotion of the digital collectibles. The lawsuit claims that Ronaldo’s endorsement of the NFTs led investors to make unsafe and costly financial decisions, contributing to a decline in Ethereum-based NFT trading volume and prices. Binance is currently embroiled in legal battles with U.S. regulators over whether its NFTs and tokens constitute investment contracts under securities law, adding complexity to the case against Ronaldo and the exchange.
The class action lawsuit facing Ronaldo highlights the risks and challenges associated with celebrity endorsements of financial products like NFTs and tokens. The legal battle underscores the importance of transparency and compliance with securities regulations in the fast-growing NFT market. Ronaldo’s involvement in promoting the CR7 NFT collection for Binance has drawn scrutiny and legal action, raising questions about the responsibility of celebrities in endorsing digital assets and their potential impact on investors. The outcome of the lawsuit and any subsequent arbitration proceedings will determine the consequences for Ronaldo, investors, and the broader NFT market.
