Global football sensation Cristiano Ronaldo is facing a class-action lawsuit totalling US$1 billion (£790 million) for promoting the largest cryptocurrency exchange, Binance, on November 30.
The lawsuit accused Ronaldo’s Binance promotion was deceptive and illegal. He is facing legal action for his involvement in facilitating the sale of unregistered securities in collaboration with Binance. He also sold non-fungible tokens (NFTs), resulting in financial losses for investors.
Ronaldo violated U.S. federal law by not revealing the amount of his compensation from Binance. Ronaldo and Binance allegedly targeted their products to individuals who were unfamiliar with cryptocurrency. On November 28, Ronaldo continued to promote Binance by posting the company advertisement on his X account, which has 110 million followers.
U.S. federal law is not the only one that opposes crypto assets promotions, particularly Binance. The United Kingdom is also in the process of formalising legislation for the crypto regime. As part of this effort, UK regulators are implementing stricter regulations on crypto firms’ marketing and communication activities.
UK financial regulator blocks company from approving Binance marketing
The UK’s financial regulatory authority blocked the approval of Binance’s financial promotions on a newly established domain, rebuildingsociety.com. On October 8, the company launched its new domain, specifically for UK consumers to promote Binance.
Binance’s spokesperson mentioned that they provided the agreement with rebuildingsociety.com with the Financial Conduct Authority (FCA) on October 2. It was a week before the implementation of FCA’s new regulation.
Rebuildingsociety.com said it had made efforts to meet consumer protection requirements for approving financial promotions related to crypto assets companies. They had applied for a waiver to align with the updated FCA rules, but the waiver was rejected on Tuesday (Oct. 30).
The FCA responded that unregistered crypto assets firms must not advertise crypto products to UK consumers. Otherwise, they are authorised by a legitimate company to endorse such
promotions. The rules outlined that regulated firms seeking approval to market products of non-regulated firms must apply to the FCA. They need FCA’s permission to demonstrate their competence and expertise in understanding their products.
The new FCA regulation mandates crypto firms to enhance consumer protection through clear, fair, and non-misleading marketing. It requires prominent risk warnings and prohibits inappropriate encouragement of investments.
Since June 2021, Binance has been prohibited from engaging in any regulated activities in the UK. Binance’s partner in the UK is also prohibited from financial promotion for crypto assets. According to the UK crypto regime regulation, crypto firms need FCA registration to approve their promotions and advertisements. However, unregistered crypto firms can still have their ads approved by authorised entities.
According to rules, anyone promoting crypto assets to UK consumers past the October deadline without complying with the regulations may commit a criminal offence. This offence is punishable by an unlimited fine or a maximum imprisonment of up to two years.
Impact on the crypto assets market
The stricter regulations regarding financial promotions for crypto assets affect the crypto firms. In response to the new rules, Binance will cease accepting new customers in the UK, on financial promotions for crypto assets will impact the crypto firms. Binance will stop accepting new customers in the UK. This action aligns with regulations that restrict overseas digital assets firms operating in the country.
Binance announced on its website that UK users will be unable to register on the platform starting at 5 p.m. local time. Binance said they will coordinate with the FCA and seek for FCA-authorised firms to approve their financial promotions promptly. Another crypto exchange, ByBit, has also halted its operations in the UK since November in response to regulatory changes. ByBit also restricted users’ access to their accounts as of October 1. Additionally, from October 8 onwards, existing users are unable to add funds, create new contracts, or increase their positions. However, they can reduce, close, and withdraw their funds on the platforms.
Binance and ByBit are not the only companies that suspended their operations. PayPal introduced paying and selling crypto to UK consumers for the first time in 2021. PayPal has also temporarily suspended the crypto services in the country from October 1 until the next year. Crypto holders can retain or liquidate their accounts at any moment. However, they are unable to make new purchases due to the suspension until next year. During this period, PayPal will collaborate closely with the FCA and adhere to its rules.
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