Explained: What is the billion-dollar lawsuit against Cristiano Ronaldo and what is football’s connection to NFTs?

Representations of cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, and Litecoin are seen in front of a displayed Binance logo in this illustration taken, June 28, 2021. (Image credit: Reuters)

Last month, Binance reached a plea deal with the United States Department of Justice which involved a fine of $43 bllion and its CEO stepping down over corruption and money laundering charges.

How is Ronaldo involved?

The Portuguese footballer announced his partnership with Binance in November 2022, following which the company announced a separate ‘CR7’ collection of NFTs which have been traded in the year since, and have been heavily advertised across Ronaldo’s social media accounts.

But last week, a group of investors sued Ronaldo in a federal American court with the claim that they were sold ‘unregistered securities’, blaming the forward for exposing them to Binance and misrepresenting it. In June 2023, the US Securities and Exchange Commission (SEC) said cryptocurrency tokens, like any other securities, must be registered with them. And the plaintiffs allege that those tokens – like the ‘CR7’ NFTs – traded on Binance are unregistered.

This fact, that Ronaldo endorsed a platform from where investors purchased ‘unregistered securities’, forms much of the basis of the lawsuit. The plaintiffs argue that they lost money due to Ronaldo’s actions, not just because his own NFT launched at a value of $77 and is now valued at $1, but also because his endorsement was also an endorsement of other ‘unregistered’ tokens traded on Binance.

According to a breakdown of the 130-page lawsuit by The Athletic, the plaintiffs have claimed that Ronaldo’s association with the company cannot be seen as a mere endorsement, but instead, should be seen as trying “to help Binance successfully solicit or attempt to solicit investors in Binance’s crypto-related securities from Florida and nationwide.”

The aforementioned slogan on his website was also mentioned in the lawsuit, per The Athletic.

What happens next?

Ronaldo will now be given the time and space to respond, and the case could either be settled out of court, or go deep into a legal trial.

While the Portuguese forward has a slew of legal defences at his disposal – his legal advisers will be letting him know how much of Binance’s wrongdoing should be held as his responsibility – it opens up an interesting debate: how much of the liability of an investment opportunity lies at the feet of the endorser?

With cryptocurrencies plummeting in value, this has already been tested in American courts. After implosion of crypto-trading platform FTX, several American athletes, including Naomi Osaka, Steph Curry, and Tom Brady had been sued on similar grounds – that they exposed investors to, and misrepresented them about, the company.

While there remains little clarity on the matter presently, Ronaldo’s lawsuit’s outcome may define how liable athletes will be held for their endorsements in the future. Even if not legally, public perception and the reputational damage may make athletes more cautious in picking endorsements.

Have other footballers promoted NFTs?

Digital collectible cards representing football players are seen in this handout illustration image from the online fantasy football game Sorare obtained by Reuters on September 20, 2021. Sorare/Handout via REUTERS

Yes. A lot of them.

At the height of the crypto craze, by the start of 2022, clubs like Liverpool and Manchester United had taken out their own NFT collections. Eventually, Liverpool only sold about six per cent, and Manchester United’s collection dropped 85 per cent in value.

Circle back to the aggressive, in-your-face social media endorsement of NFTs of the Bored Ape collection from former Chelsea legend John Terry last year. Chelse players of past and present, including Ashley Cole, Tammy Abraham, and Reece James had all gotten involved, but after the crypto crash in 2022 itself, none continue to do so today.

Others who have endorsed NFT projects include Paul Pogba, Son Heung-Min, Neymar, Trent Alexander-Arnold, Andrew Robertson, Mateo Kovacic, Marcelo Brozovic, the list goes on. The likes of Antoine Griezmann, Gerard Pique, and Rio Ferdinand even invested in an entire NFT platform, Sorare.

At the moment, not many continue to endorse cryptocurrency tokens and exchanges on social media. But football’s two highest profile players do. Ronaldo’s relationship with Binance has hit headlines due to the lawsuit but as recently as last week, Lionel Messi has been putting out social media posts on cryptocurrency trading platforms. Both Ronaldo and Messi have the highest followed accounts on Instagram.