A federal judge in New York has dismissed a class-action lawsuit against Dolce & Gabbana USA, determining that the company’s U.S. division is not liable for the alleged shortcomings of the DGFamily NFT project. This initiative reportedly raised over $25 million based on promises of digital and physical rewards to investors, many of whom feel cheated by the venture.
U.S. District Judge Naomi Reice Buchwald ruled on Friday that Dolce & Gabbana USA did not act as an “alter ego” for its parent company, Dolce & Gabbana SRL, which was responsible for executing the NFT project. The court found a lack of evidence supporting claims of improper control or misconduct between the two entities, thus rejecting arguments that the American arm should be held accountable for the project’s failure.
The ruling presents a significant setback for investors, particularly those who accused the project of orchestrating a “rug pull,” where funds are gathered without delivering promised products or rewards. As criticism mounts regarding the abandonment of various NFT projects, the case exemplifies the challenges in pinning liability on international corporate structures.
The lawsuit, filed initially in May 2024 and later amended, claimed that the defendants misrepresented the offerings by asserting purchasers would receive unique digital experiences and exclusive items through multiple, staggered sales over two years. Luke Brown, a plaintiff from Culver City, stated he lost approximately $5,800 after the developers ceased communication and failed to deliver the promised benefits.
The DGFamily endeavor sold around 5,000 NFT “boxes” priced between 1.224 and 40 ETH, equating to approximately $3,600 to $120,000 at launch. The project faced delays, with the initial offering not occurring until well after the originally announced date. The lawsuit highlighted further complications, such as NFTs not being usable in Decentraland due to failures in obtaining requisite approvals prior to their release.
Judge Buchwald noted that despite some operational overlap between the U.S. and Italian entities, such overlap does not imply the level of control necessary for liability. She criticized the lawsuit’s approach, which did not adequately distinguish the individual responsibilities of the two companies.
The court rejected a further attempt by Brown to amend the complaint, stating he had already been given an opportunity to address deficiencies after the defendants pointed out their objections. It emphasized that legal claims must be underpinned by facts rather than just generalized allegations.
In addition to Dolce & Gabbana USA, the lawsuit included Dubai-based UNXD Inc. and Italy-based Bluebear Italia SRL as defendants. However, the court highlighted that these companies had yet to be served with the complaint, preventing further legal recourse in the case.
As the NFT market grapples with challenges and widespread claims of fraud by various projects, the complexities of holding multinational corporations accountable for actions taken under varied jurisdictions remain an ongoing struggle for investors.
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