In the ongoing investor lawsuit waged against Dolce & Gabbana (“D&G”) and its partners over their controversial non-fungible token (“NFT”) project, the Italian fashion brand is now facing an additional set of allegations following the recent filing of an amended complaint. According to the newly-filed complaint, which targets Dolce & Gabbana USA Inc., UNXD, Inc., and Bluebear Italia S.R.L. engaged in deliberate fraud, market manipulation, and deceptive practices in connection with the DGFamily NFT project, which he claims was a “fraudulent scheme” from the outset and designed to willfully mislead investors.
In the amended complaint, which was filed in the U.S. District Court of the Southern District of New York on September 25, Brown claims that Dolce & Gabbana USA Inc., UNXD, Inc., and Bluebear Italia S.R.L. (the “defendants”) collaborated to launch and promote NFTs under the “DGFamily” name. And while the core of Brown’s accusations remain the same as those in the initial complaint (namely, he and other investors were allegedly promised exclusive digital wearables, physical clothing, and access to VIP events as part of their purchase that were never delivered), the amended complaint expands on those assertions.
Among other things, Brown asserts that the defendants engaged in a “premeditated scheme” to defraud investors in furtherance of which they “artificially inflated” the value of the “patently worthless” NFTs.
Fraudulent Intent & Market Manipulation
Setting the stage in the amended complaint, Brown doubles-down his earlier claims that D&G and co. never intended to deliver the allegedly “high value” benefits attached to the DGFamily NFTs, that it engaged in “reckless incompetence or greed” that led to the project’s collapse, and that the entire project was a calculated fraud. Referring to the project as a “rug pull,” Brown argues that D&G abandoned the project after collecting millions from investors. Specifically, he alleges that the “[d]efendants misrepresented the status of their NFT project … then failed to provide a complete set of benefits as promised.”
Brown goes on to argue that this was not a case of mere mismanagement, but part of a broader strategy by the defendants, which “manipulated the initial and resale markets” for D&G’s NFTs, with the sole intent of enriching themselves at the expense of investors.
Securities & Commodities Law Violations
The amended complaint further details how the defendants “artificially manipulated the price of the DGFamily products” by coordinating purchases and sales to drive up prices. According to the amended complaint, the defendants “used their investors to buy DGFamily products to illegally drive up their price” – a tactic that Browns says amounts to outright market manipulation, invoking both securities law and commodities fraud claims.
Brown maintains in his lawsuit that the Dolce & Gabbana NFTs meet the definition of unregistered securities, and their sale constituted a violation of the Securities Exchange Act of 1934. At the same time, Brown wages claims under the Commodity Exchange Act, alleging that the defendants publicly “touted” the NFTs’ value while secretly engaging in manipulative trading practices, creating a false sense of scarcity and demand, conditioning the NFT buyers to expect to receive more than they originally invested.
Expanded Timeline of Failures
Another critical aspect of the amended complaint is the expanded timeline over which the defendants allegedly failed to deliver on the DGFamily NFTs’ promised benefits. In the amended complaint, Brown provides an expanded chronology of alleged delays, broken promises, and missed deadlines, many of which occurred while D&G allegedly continued to promote the NFTs publicly. For example, Brown details how, on April 24, 2022, D&G began selling NFTs with promises of “digital wearables, physical clothing, and exclusive events” for buyers. However, by June 2022, most investors had yet to receive any of the promised benefits.
Meanwhile, Brown contends that the defendants announced a new NFT collaboration with InBetweeners in December 2022, a time when the DGFamily project was already under heavy scrutiny. This public announcement further fueled concerns that the defendants were focused more on promoting new ventures (both NFT projects and traditional fashion ones) rather than addressing the growing dissatisfaction among DGFamily investors.
Finally, another key event took place in January 2023, when UNXD held another virtual town hall, this time promising monthly updates and claiming that Dolce & Gabbana was still fully involved in the project. Despite these reassurances, the delays continued, and Brown argues that these public engagements were used as another distraction from the project’s failings.
In addition to bulking up the allegations, Brown also adds new defendants to the mix, naming Christian Barbujani, Global Innovation Manager at D&G, and Davide Sgherri, Head of New Media at D&G, as key figures in the development and promotion of the NFTs. Both individuals are accused of directly contributing to the deceptive marketing practices that allegedly lured investors into purchasing the NFTs. The complaint also implicates D&G co-founder Domenico Dolce, co-founder of Dolce & Gabbana, accusing him of personally promoting the project while knowing that it was unlikely to succeed. According to the filing, Dolce “lauded the project upon announcement,” using his influence to convince investors that the NFTs were valuable assets.
Claims for Punitive Damages & Rescissory Relief
As a final note, in the amended version of his lawsuit, Brown emphasizes claims for punitive damages, arguing that Dolce & Gabbana was “willful” “reckless” and malicious, and therefore, its actions warrant additional financial penalties beyond mere restitution. He argues that the deliberate nature of the fraud meets the standard for such damages because D&G’s behavior was particularly egregious. He is also seeking rescissory relief, which, according to the amended complaint, would effectively undo the NFT sales and require D&G to refund all purchases made during the class period. According to Brown, this relief is necessary because “the complete set of benefits promised … were never released.”
The case is Brown v. Dolce & Gabbana USA, Inc., et al., 1:24-cv-03807 (SDNY).
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