A November class-action lawsuit implicated soccer star Cristiano Ronaldo, alleging his endorsement of the CR7 non-fungible token (NFT) collection misled buyers into acquiring potentially unregistered securities. Initially highly valued, these NFTs have sharply declined, causing significant financial losses for investors.
The $4.3 billion penalties against Binance Holdings Ltd. from the U.S. Justice Department in early November reverberated across the crypto world. Changpeng Zhao’s admission to money laundering and subsequent resignation signaled broader concerns beyond mere financial and leadership impacts for the top crypto trading platform.
The lawsuit’s focus on Ronaldo’s alleged failure to disclose compensation for promoting the NFT collection intensifies concerns regarding fraud and the risks associated with celebrity endorsements. This legal action parallels past incidents involving celebrities in crypto-related scandals, accentuating the growing scrutiny on celebrity endorsements in the crypto industry. Furthermore, the involvement of entities like Major League Baseball, Formula 1, and additional celebrities in legal battles related to collapsed crypto platforms like FTX Trading Ltd. underscores the heightened awareness of regulatory complexities and potential liabilities for those connected to the volatile crypto landscape.
Kim Kardashian’s recent $1.26 million fine highlights SEC regulation enforcement within the crypto space. Unlike high-profile figures like Matt Damon or Larry David, Kardashian faced consequences for endorsing EthereumMax, classified as a security by the SEC. This scenario underscores the intricacies of celebrity endorsements in crypto, where endorsing specific coins under SEC jurisdiction demands stricter disclosures compared to standard FTC regulations for advertising investment opportunities.
This instance illuminates how regulatory boundaries impact celebrity endorsements in crypto. Kardashian’s endorsement, though affecting fewer buyers than major crypto platform ad campaigns, breached regulations by endorsing a specific coin, leading to SEC penalties. It emphasizes the critical need for clear regulatory adherence, especially in distinguishing endorsements of cryptocurrencies from those of securities, within the influencer marketing domain.