Cristiano Ronaldo Sued Over Promotion of Binance Crypto Platform

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Cristiano Ronaldo has been hit with a proposed class action lawsuit that alleges the international soccer star illegally engaged in the mass solicitation of unregistered securities on behalf of embattled cryptocurrency exchange Binance, which last week was hit with a record $4.3 billion Treasury Department fine over violations of anti-money laundering statutes and other charges.

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The 129-page suit says that celebrities such as Ronaldo have been warned by the United States Securities and Exchange Commission (SEC) that virtual tokens, including Binance’s native BNB token, may be securities and that the paid promoters’ investment solicitations may be subject to federal securities law. The case contends that Binance’s partnership with Ronaldo, among other influencers, was “clearly designed to use the positive reputation associated with specific celebrities to convince consumers that Binance was a safe place to buy and sell cryptocurrency.” 

“With the rise to prominence of the internet and social media, a new multi-billion-dollar cottage industry of ‘influencers’ has been created. Influencers played a major role in Binance’s rise by hyping these unregistered securities in exchange for multimillion-dollar payouts.” 

On November 21, 2023, NBC News reported that Binance founder Changpeng Zhao would step down after the world’s largest crypto exchange pleaded guilty to violations of the anti-money laundering Bank Secrecy Act, among other charges. Binance will pay more than $4.3 billion, the largest penalty in Treasury Department history, to settle the charges, NBC reported, and Zhao, who the suit says faces up to 18 months in prison, has also agreed to pay a $50 million fine over what Treasury Secretary Janet Yellen called “consistent and egregious violations of U.S. anti-money laundering and sanctions laws.” 

In June, the SEC filed 13 federal charges against Binance.com, U.S.-based affiliate BAM Trading Services, Zhao and several related entities. The SEC alleged that Binance illegally offered and sold various unregistered securities, including its BNB token, and several crypto-lending products and a staking-as-a-service program. The SEC also claimed the defendants run an unregistered exchange, broker-dealer and clearing agency and have attempted to evade federal securities laws. 

“To summarize, as SEC Chair Gary Gensler stated: ‘Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of law,’” the complaint relays. 

As the lawsuit tells it, there exists proof that Binance’s apparent fraud was “only able to reach such heights” with the willing help of “some of the wealthiest, powerful [sic] and recognized organizations and celebrities across the globe—just like Defendant Ronaldo,” who entered into a multi-year partnership with Binance in 2022. During the relevant time period, the case shares, Binance’s solicitation partnerships with Ronaldo and other promoters worldwide put them in a position to “receive kickbacks and commissions based on their promotion and sale of unregistered securities to investors.” 

In particular, the suit says Ronaldo’s agreement with Binance included posting on social media to his hundreds of millions of followers, promoting his exclusive Binance NFT collection, and appearing in commercials, among other activities. The objective of the Binance-Ronaldo partnership, the case states, was to help the company “successfully solicit or attempt to solicit investors” in Binance securities in exchange for “a substantial total compensation package” that likely included digital assets transmitted through Binance platforms. 

As the lawsuit tells it, once a user signed up for Binance to buy or access Ronaldo NFTs, they were more likely to invest in Binance for other purposes, including in the company’s BNB token and other staking programs. The suit says that the more success Ronaldo had in soliciting potential Binance investors, “the more he stood to gain financially.”

Ultimately, Binance and Ronaldo knew the advertisements featuring the soccer star “targeted consumers unfamiliar with crypto,” the lawsuit alleges. 

“Given Mr. Ronaldo’s investment experiences and vast resources to obtain outside advisors, he knew or should have known of potential concerns about Binance selling unregistered crypto securities and/or that he was aiding and abetting Binance’s fraud and/or conversion,” the filing argues. 

The filing notes that the SEC and state regulators have over the last half decade found liable a stable of celebrities, crypto brokers and exchanges for offering tokens similar to Binance’s BNB coin. Crucially, the lawsuit says, binding law concerning the mass promotion of cryptocurrencies by celebrities nationwide has enabled investors to state a cause of action against a crypto promoter “who had the financial incentive in the crypto products and exchange, for making mass solicitations for cryptocurrency sales over the internet.” 

The suit relays that the value of Binance’s native BNB token, in simplified terms, is based on the total number of existing BNB coins and the profits of the Binance exchange, all of which depend “upon the actions of others.” The case contends that the BNB token is, therefore, a security. 

“In fact, unlike other crypto tokens which are traded on an open market, the number of existing BNB coins all depends upon the ‘burn rate’ of the token, which is established by Binance’s Founder and Binance.com’s CEO Zhao. This is, accordingly, a classic example of a centralized exchange that is promoting the sale of an unregistered security. As explained herein, for similar reasons, tokens including BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, as well as Binance programs like the ‘BNB Vault,’ ‘Simple Earn,’ and certain staking programs are also unregistered securities that Binance offered through one or both of the Binance platforms.” 

The lawsuit looks to cover all persons and entities who, within the applicable statute of limitations period, bought, held and/or sold the cryptocurrency tokens BNB and/or BUSD on any platform; bought, held and/or sold SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, or COTI on Binance.US or Binance.com; or participated in the programs BNB Vault, Simple Earn and/or any staking program through Binance.US or Binance.com. 

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