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Cristiano Ronaldo Crypto Lawsuit Tests Endorser Liability

michael mccann
·3 min read

Cristiano Ronaldo’s promotion of Binance, the cryptocurrency exchange that last month pleaded guilty to federal charges for anti-money-laundering and unlicensed money transmitting, should cost the soccer superstar more than $1 billion, a new lawsuit alleges.

On Nov. 27, a group of investors who purchased what they describe as “unregistered securities” from Binance sued Ronaldo in a Miami federal court. They blame the Al Nassr FC and the Portugal national team forward, claiming they bought after “being exposed” to Ronaldo’s “misrepresentations and omissions” about Binance. They hope for their case to be certified as a class action on behalf of other Binance investors allegedly hoodwinked by Ronaldo, 38.

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The 129-page complaint, filed in a Miami federal court, painstakingly details Ronaldo’s endorsement of and partnership with Binance. It highlights his social media postings, including to hawk an NFT collection exclusively on Binance and the chance to earn prizes, as well as Binance’s promotional posts featuring Ronaldo.

The Securities and Exchange Commission and the Commodity Futures Trading Commissions have litigated against Binance, claiming it has violated U.S. trading and securities laws by offering and selling unregistered crypto derivatives. Binance has allegedly also coached its promoters and influencers to circumvent applicable regulations.

As was apparent during the collapse of FTX, some crypto companies have exploited an absence of government oversight and capitalized on legal uncertainty regarding crypto exchanges.

The feds are now stepping up to curb what they view as crypto abuses.

“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed,” U.S. Attorney General Merrick Garland said last month after Binance agreed to pay the government over $4 billion. “The message here should be clear: Using new technology to break the law does not make you a disruptor, it makes you a criminal.”

Whether responsibility for Binance’s wrongdoing should extend to Ronaldo is less clear. It’s the same basic question raised in lawsuits brought by FTX customers against Tom Brady, Naomi Osaka, Steph Curry and other celebrities who encouraged fans to buy cryptocurrencies.

The plaintiffs in Sizemore et. al v. Ronaldo believe Ronaldo acted more like a seller of unregistered securities than a mere endorser. His so-called “mass solicitation of investments” was part of Binance’s program to furnish “kickbacks” to promoters. The plaintiffs also stress a decision last year by the U.S. Court of Appeals for the Eleventh Circuit. In Wildes v. BitConnect, the court held podcasts and social media posts, when designed to attract a crypto investment, could give rise to liability for promoters on grounds they’re advancing a broader scheme.

Like other celebrity endorsers, expect Ronaldo to raise several defenses.

One is a lack of causation. The investors’ decision to buy was their own and might have reflected numerous considerations and influences. While watching a celebrity’s advertisement or reading their social media post might nudge someone in the direction of buying, the investors are still adults, and the celebrities are not financial experts. Some celebrity promoters have lost money on crypto, too.

Last year a federal judge dismissed a lawsuit brought against Kim Kardashian, Floyd Mayweather and other celebrity promoters of cryptocurrency, reasoning investors should “act reasonably before basing their bets on the zeitgeist of the moment.”

Ronaldo can also assert that his social media posts are unrelated to Binance’s unlawful acts, are relatively bland and clichéd, and constitute puffery, meaning generic advocacy of a product or service. Courts have generally sided against holding endorsers liable for a company’s alleged wrongdoing since they lack knowledge of wrongdoing. In 2004, the U.S. Court of Appeals for the Ninth Circuit rejected liability for MLB player Steve Garvey, who had endorsed a controversial weight loss supplement, saying Garvey wasn’t aware of the problems.

Even if Ronaldo, Brady and other athletes and celebrities aren’t liable, their fans might think twice about the value of their endorsements of novel financial instruments.