Benzinga - In early November, Binance Holdings Ltd. was hit with $4.3 billion in penalties and forfeitures by the U.S. Justice Department. The fine was a result of several wrongdoings by the company, ranging from money laundering to aiding criminals and terrorist organizations.
Former Binance CEO Changpeng Zhao (CZ) stepped down and admitted to participating in money laundering. “I made mistakes, and I must take responsibility. This is best for our community, for Binance and for myself,” he wrote in a post on X.
Binance is the world's largest crypto trading platform, so the fallout from such a large penalty was likely to extend beyond monetary repercussions or the CEO stepping down.
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In a class action lawsuit filed Nov. 28, the plaintiffs argue that Portuguese soccer player Cristiano Ronaldo's endorsement and involvement with Binance resulted in financial losses for the plaintiffs as well as the sale of unregistered securities.
California resident Michael Sizemore, the lead plaintiff in the lawsuit, claims that Ronaldo's "misrepresentations and omissions regarding the Binance platforms" caused him to buy "unregistered securities from Binance." Because of this, the plaintiffs are seeking damages exceeding $1 billion.
The primary issue the lawsuit discusses is Ronaldo's CR7 non-fungible token (NFT) collection, which debuted in November 2022. The collection was a set of NFTs that included the best moments from Ronaldo's career. At the time of minting, the cheapest NFT sold for $77, and the top-tier NFTs went for an average price of nearly $23,000. The NFTs are now essentially worthless, with many from the collection now selling for just $1.
The plaintiffs argue that Ronaldo's endorsement of the collection caused them to buy the NFTs, which they claim are unregistered securities that left them with substantial financial losses.
"Mr. Ronaldo received a substantial total compensation package, which likely included compensation in the form of digital assets transmitted through the Binance platforms," according to the plaintiffs.
The plaintiffs also argue that Ronaldo should have disclosed his compensation for this role but did not.
This is not the first time a lawsuit has been filed against a celebrity for endorsing a crypto mishap. Media personality Kim Kardashian was forced to settle a lawsuit surrounding her involvement in EthereumMax, a pump-and-dump crypto scam in late 2022. While the settlement was for much less, the legal precedent is still important to consider.
Major League Baseball, MLB, Formula 1 and a handful of prominent celebrities are also facing lawsuits for their involvement in the defunct crypto trading platform FTX Trading Ltd.
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