More Binance Woes - CR7 Sued & Philippines Regulation Crackdown

30 Nov 2023 by Rory Kejzerko 3 min read

As events over the past couple of weeks have indicated, Binance is currently experiencing a flurry of internal struggles, as well as a wrath of scrutiny from external regulators.

From its founder Changpeng Zhao (CZ) stepping down as CEO (whilst paying a $150 million fine), to a $4.3 billion fine, and now potential ‘FTX-style’ fraud being rumoured, the world’s leading crypto exchange is yet to catch a break as we near the end of Q4 2023.

In making matters worse, Binance now has to contend with two - albeit more trivial - other matters, with these being the suing of its star ambassador Cristiano Ronaldo, as well as Filipino investigators probing the platform in regards to its lack of licences in the region.

CR7 Sued For Binance NFTs

Per a filing made on November 27th, Ronaldo - who’s now applying his trade in Saudi Arabia - has been hit with a proposed class-action lawsuit from plaintiffs - namely Michael Sizemore, Mikey Vongdara and Gordon Lewis - who claim that they’ve suffered losses from his promotion of Binance.

More specifically, the lawsuit relates to the superstar’s NFT collections, and how his promotion of such products equated to him ‘assisting in, and/or actively participating in the offer and sale of unregistered securities in coordination with Binance’.

Whilst, in of themselves, the NFTs in question aren’t seen as unregistered securities, the claim looks at what path Ronaldo NFT purchasers would have taken after being introduced to the Binance platform.

Here, it suggests that they would have likely gone-on to use the platform for other purposes, such as investing in what the plaintiffs claim as unregistered securities (i.e. Binance’s native $BNB token, as well as tokens in its crypto yield programs).

Such concerns stem from the undeniable popularity of the several CR7 NFT collections on Binance, as with a 850+ million social media following, the endeavours were able to elevate the platform to new heights. Stats wise, ‘Binance’ searches reportedly increased 500% in the week following the initial sale in mid-2022.

When it comes to Ronaldo’s own personal liability, the claim alleges that the legendary footballer should have known “about Binance selling unregistered crypto securities,” as through past corporate endeavours of his, he’s acquired “investment experience and vast resources to obtain outside advisers”.

Additionally, the proposed lawsuit references the fact that Ronaldo failed to follow guidance presented by the Securities and Exchange Commission (SEC), which relates to celebrities dislodging payments received for promoting cryptocurrencies.

From here, Sizemore, Vongdara, and Lewis all seek damages and funds to cover legal fees.

Binance Operating Without a Licence in The Philippines

Away from its US-based troubles, Binance’s woes have been taken international through the Philippines SEC issuing a warning statement to domestic users on November 28th.

Here, the digital document warns that Binance isn’t authorised to sell or offer securities in the region. This stems from its lack of registration to do so (i.e. it hasn’t provided details on the issuance prices, nature, and other data regarding its securities offerings), as well the fact that it isn’t registered with the Philippines Securities Regulation Code (SRC).

Additionally, the Philippines SEC argues that Binance has been illicitly promoting its services in the country, which could lead to those culpable being held criminally liable. More specifically - and under Section 28 of the SRC - such actions are criminal offences that carry a fine of up to 5 million Philippine pesos ($90,300), or imprisonment of 21 years… or even both under Section 73 of the SRC.

Making matters worse, such development comes after multiple warnings were handed to Binance, however given its wrath of internal and external struggles in the US, perhaps it’s understandable as to why its Filipino troubles weren’t made a priority.

Further, some are speculating that the Philippines SEC is simply copying regulatory decisions that are being made by its US counterpart. If true, this could potentially lead to a domino-effect Binance crackdown across many other international jurisdictions.

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