New Allegations in Dolce & Gabbana NFT Lawsuit

The Dolce & Gabbana NFT lawsuit has taken a dramatic turn, escalating with new allegations that put the Italian fashion house under intense scrutiny. The lawsuit now targets Dolce & Gabbana USA Inc., UNXD, Inc., and Bluebear Italia S.R.L., accusing them of deliberate fraud, market manipulation, and deceptive practices in relation to the DGFamily NFT project. These fresh claims allege that the project was a “fraudulent scheme” designed from the outset to mislead investors.

Filed in the U.S. District Court of the Southern District of New York on September 25, the amended complaint suggests that Dolce & Gabbana, in collaboration with its partners, purposely misled investors with exaggerated promises about their DGFamily NFTs. The plaintiffs, led by Brown, argue that the defendants falsely promised exclusive digital wearables, physical clothing, and access to VIP events, none of which were delivered.

Among the most serious claims, Brown asserts that the defendants artificially inflated the value of what he described as “worthless” NFTs, orchestrating a premeditated scheme to defraud investors.

Fraud and Market Manipulation Accusations

Within the amended complaint, Brown emphasizes that Dolce & Gabbana and its partners never intended to fulfill the high-value benefits tied to the DGFamily NFTs. He accuses the fashion brand and its associates of engaging in “reckless incompetence or greed,” which led to the project’s downfall. Referring to the project as a “rug pull,” Brown alleges that D&G collected millions from investors before abandoning the initiative. According to him, D&G misrepresented the project’s status and failed to deliver the complete set of promised benefits.

Furthermore, Brown contends that this wasn’t just mismanagement but a deliberate strategy to manipulate both primary and resale markets for their NFTs, focusing solely on their enrichment at the investors’ expense.

Violations of Securities and Commodities Laws

The amended complaint goes into detail about how the defendants allegedly manipulated the prices of DGFamily NFTs. By managing coordinated purchases and sales, they aimed to drive up the NFTs’ prices artificially. This conduct, according to Brown, constitutes outright market manipulation, violating both securities and commodities laws. The lawsuit alleges that the sale of Dolce & Gabbana NFTs equates to unregistered securities, thus breaching the Securities Exchange Act of 1934.

Brown also invokes the Commodity Exchange Act, asserting that the defendants promoted the NFTs deceptively, creating a false sense of scarcity and demand. This, he argues, conditioned buyers to expect more than what was initially promised.

Extended Timeline of Failures

Brown’s amended complaint provides an expanded timeline showing repeated delays and broken promises. For instance, in April 2022, D&G began selling NFTs with the promise of digital wearables, physical clothing, and exclusive events. However, by June 2022, most investors had yet to receive these benefits. The continued promotion of the project, despite these failures, led to increased dissatisfaction among investors.

Interestingly, while the DGFamily project was under scrutiny in December 2022, D&G announced a new NFT collaboration with InBetweeners, further raising concerns about their priorities. UNXD held another virtual town hall in January 2023, where they promised monthly updates. Despite these assurances, the delays persisted, with Brown alleging that such public engagements served merely as distractions.

Adding more weight to the case, Brown names new defendants, including Christian Barbujani, the Global Innovation Manager at D&G, and Davide Sgherri, Head of New Media at D&G. Both are accused of contributing directly to the deceptive marketing practices. Additionally, Dolce & Gabbana co-founder Domenico Dolce is implicated for using his influence to promote the project despite knowing it was unlikely to succeed.

Claims for Punitive Damages and Rescissory Relief

In the amended lawsuit, Brown calls for punitive damages, labeling Dolce & Gabbana’s actions as “willful,” “reckless,” and “malicious.” He argues that such behavior warrants financial penalties beyond mere restitution. Brown also seeks rescissory relief, which would effectively cancel the NFT sales and require refunds for all purchases made during the class period. This relief is crucial, he states, because the promised benefits were never realized.

The case is Brown v. Dolce & Gabbana USA, Inc., et al. , 1:24-cv-03807 (SDNY).

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