Dolce & Gabbana Faces Lawsuit for Alleged NFT “Rug Pull” Scheme
Dolce & Gabbana is currently facing a proposed class action lawsuit for allegedly violating federal securities laws through its now-defunct DGFamily non-fungible token (“NFT”) project. Luke Brown filed a complaint in the U.S. District Court for the Southern District of New York federal court last month, claiming that Dolce & Gabbana collaborated with UNXD and inBetweeners to create and promote the DGFamily project, which included digital assets and exclusive brand-related benefits. Brown accuses Dolce & Gabbana of deceiving NFT buyers after collecting millions of dollars from consumers and abruptly abandoning the project.
In his complaint, Brown alleges that Dolce & Gabbana launched the DGFamily NFTs in partnership with UNXD and inBetweeners in April 2022. The project reportedly generated $25 million in sales, promising consumers access to a variety of benefits over a two-year period. These benefits included virtual wearables, physical clothing, and exclusive access to D&G events.
However, Brown claims that the defendants failed to deliver the promised benefits to him and other DGFamily NFT buyers, despite repeated assurances. By only providing two out of eight guaranteed “drops” before discontinuing the project, Brown accuses Dolce & Gabbana of engaging in a “rug pull” scheme, where creators abandon a project after soliciting funds from investors.
Brown further alleges that the defendants manipulated the trading volume and value of the DGFamily NFTs through tactics such as “wash trades,” creating a false impression of demand and value. This scheme led to thousands of individuals purchasing fraudulent security products.
Brown asserts various causes of action against the defendants, including fraud, breach of contract, unjust enrichment, and violations of securities laws. He seeks monetary damages, including repayment of all investments made in buying DGFamily Products, on behalf of himself and others who purchased the DGFamily NFTs.
This case highlights the relatively unregulated nature of NFTs and serves as a cautionary tale for brands considering their use as a marketing tool. Dolce & Gabbana is not the first brand to face legal issues related to NFTs, with other luxury brands like Gucci, Louis Vuitton, and Burberry also venturing into the world of Web3 through NFT projects.
The lawsuit is titled Brown v. Dolce & Gabbana USA, Inc., et al., 1:24-cv-03807 (SDNY).
Source link
#Dolce #Gabbana #Hit #Lawsuit #NFT #Rug #Pull #Scheme
