Investor Files Class Action Lawsuit Against Dolce & Gabbana and UNXD Over Alleged Fraudulent NFT Project

News | May 29, 2024 By:

On Thursday, May 16, 2024, Luke Brown, resident of Culver City, California, filed a class action lawsuit against fashion brands Dolce & Gabbana USA Inc. and Dubai-based company UNXD Inc., along with Italian corporation Bluebear Italia S.R.L. The lawsuit alleges that the defendants launched a fraudulent non-fungible token (NFT) project that failed to deliver on promises made to investors.

Brown invested $6,000 to purchase NFTs from the companies’ “DGFamily” collection in April 2022. He claims to have lost around $5,800 from the investment. In the lawsuit, Brown is seeking to represent a class of individuals who bought DGFamily NFTs directly from the companies or on the secondary market between April 2022 and the filing date.

The complaint alleges that Dolce & Gabbana and UNXD marketed the NFTs by claiming purchasers would receive valuable digital and physical rewards over time. These included digital fashion wearables for the metaverse, physical Dolce & Gabbana clothing, and access to exclusive events. However, the filing states that over 75% of the promised benefits were never delivered.

It notes the NFTs functioned like financial securities since investors expected to receive returns beyond just the initial Ethereum currency used to purchase them. However, the lawsuit says the companies failed to properly register the DGFamily NFTs as securities with the SEC before offering and selling them to U.S. investors.

Brown accuses the defendants of manipulating the NFT market through false statements that exaggerated the project’s progress and misled buyers about continuous support. He alleges the companies committed fraud and violated securities laws through this misleading marketing of an unregistered offering. The suit also includes claims of breach of contract, unjust enrichment, negligence, and violations of state consumer laws.

If certified as a class action, the lawsuit seeks compensatory damages for lost investments. It requests rescission of all NFT sales during the alleged fraud period to repay investors and grant them control over recovered funds until repayment. The Complaint alleges the defendants’ actions represented an unlawful “rug pull” scheme within the cryptocurrency industry. The term refers to project developers abandoning a project after soliciting funds from buyers without delivering promised features or support.

The case is currently pending in the U.S. District Court for the Southern District of New York.

Please contact BlockTribune for access to a copy of this filing.