Lights, Camera, Litigation: The Unraveling of Celebrity Web3 Collaborations With a net worth of USD500 million, CR7 is one of the wealthiest athletes in the world. Others such as Leo Messi, Justin Bieber, Amitabh Bachchan, and Virat Kohli are associated with Bitget, Bored Ape, BeyondLife, and FanCraze, respectively
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What do Messi, CR7, Justin Bieber, Paris Hilton, Pierre Gasly, Amitabh Bachchan, and Virat Kohli have in common apart from being global personalities? They all are associated with web3 projects, be it NFT or cryptocurrency.
The public loves to adore such celebrities and hence does take their association with a product as a trust index. However, this has not always been the case, be it for Maggi or Vimal. And the latest to get entangled in the legal implications of being associated with a project is none other than Portuguese professional footballer, Cristiano Ronaldo.
Having been associated with Binance, since June 2022, Ronaldo is now facing a USD 1 billion lawsuit for promoting the largest crypto exchange in the world. The plaintiffs alleged that his association led them to invest in the loss-making investments.
Ronaldo and Binance launched their first NFT project in November last year with the first seven CR7 NFTs. In July, they dropped a second collection and a third one in October.
With a net worth of USD500 million, CR7 is one of the wealthiest athletes in the world. Others such as Leo Messi, Justin Bieber, Amitabh Bachchan, and Virat Kohli are associated with Bitget, Bored Ape, BeyondLife, and FanCraze, respectively.
"The lawsuit against Cristiano Ronaldo is similar to the ones seen before in the cases of Tom Brady, Stephen Curry, and other major celebrities for appearing in FTX commercials," shares Shivam Thakral, CEO, BuyUcoin.
Celebrity involvement equals trust?
Brand plays a very big role, be it for the promoter or the consumer. Having a renowned name associated leverages the trust of that person for consumers. But this water needs to be carefully tread. "Celebrity endorsements can indeed sway user trust, but it is a two-sided coin. They can enhance visibility and credibility while also posing risks of exploitation and market manipulation," shares Vikram Subburaj, CEO, Giottus Crypto Platform.
CR7 is the most-followed celebrity on Instagram with 613 Million followers. Indian cricketer Virat Kohli is the most followed Indian personality with 264 Million followers. "The fan following mostly follows what their idol endorses and this puts retail new users with little-to-no knowledge of crypto into compromising positions. New users usually look at celebrity endorsements as a green flag for most crypto projects. This needs to be changed with more awareness," notes Gracy Chen, Managing Director, Bitget, a crypto exchange that partnered with Messi.
"Celebrities have to weigh capacity risks and blessings before deciding whether to promote NFT, crypto, or blockchain initiatives because the decision in the long run lies with every character," adds Thakral. "It suggests a higher level of responsibility on (celebrities) part which is difficult in practice," notes Subburaj.
What can be done? Should endorsements continue or be scrutinized?
Regulators need to step in and play an active role as per the industry players. "The current CR7 fiasco clearly signals a dire need for regulatory guidelines established by global financial authorities, and blaming a single entity or celebrity wouldn't help the bigger picture," shares Thakral.
The Security and Exchange Board of India (SEBI) have cautioned celebrities from endorsing any crypto-related project, through advertisement or online content. "While some celebrities may be acquainted with the legal and ethical considerations involved, others may not be or may simply choose to ignore the risks," adds Chen. The Advertising Standards Council of India have laid down set standard guidelines for the promotion of crypto-related products.
"Celebrity endorsements should also be fair on two counts — the potential risks should be clearly stated and the regulatory disclaimers prominently displayed," adds Subburaj.
What should celebrities do?
Celebrities should have a better understanding of crypto-related project risks and should conduct due diligence before endorsing any digital assets. "Even though it may be impossible to hold celebrities completely accountable for their promotions, they should take proactive steps to ensure compliance with the law, transparency with their audience, and responsible promotion of virtual digital assets," adds Subburaj.
"We see the crypto industry as not solely built for financial investment, but as an intersection of blockchain technology with modern-day lifestyle and entertainment," shares Chen.
Chen shares that brands and celebrities should promote ethically and prioritise the safety of their users first. "Ultimately, celebrity endorses can help demystify complex concepts, take the fear out of new asset classes like crypto, and introduce valuable opportunities to their audience. In doing this, they must prioritise the financial well-being and trust of their followers," concludes Subburaj.