In brief
- A federal judge has ruled that Dolce & Gabbana USA is not liable for its parent company’s allegedly failed DGFamily NFT project, which raised over $25 million with promises of luxury goods and exclusive access.
- The court found no evidence that the U.S. arm operated as an “alter ego” of the Italian entity behind the NFTs, rejecting claims of shared control and group misconduct.
- With D&G USA out and foreign defendants still unserved, the case faces major setbacks as investors allege the project was quietly abandoned.
A federal judge has dismissed a proposed class-action lawsuit against Dolce & Gabbana USA, ruling the luxury fashion company’s American arm was not responsible for an allegedly failed NFT project that raised over $25 million from investors who were promised exclusive digital and physical merchandise.
US District Judge Naomi Reice Buchwald sided with Dolce & Gabbana USA Inc. on Friday, dismissing the lawsuit because the company wasn’t an “alter ego” of its Italy-based parent company, Dolce & Gabbana SRL, which actually operated the “DGFamily” NFT project.
“Although Plaintiff has alleged facts to suggest some overlap between the operations of [the Italian company] and [D&G USA], this overlap is not unusual and Plaintiff’s allegations do not rise to the level that indicates the kind of complete domination and control that is required,” Buchwald wrote, citing established precedent.
The ruling deals a crushing blow to hundreds of NFT buyers who claimed they were victims of what the lawsuit called a “rug pull” scheme.
As NFT markets have cooled from their 2021-2022 peak, numerous projects have faced similar allegations of abandonment or fraud, but proving liability across complex international corporate structures remains difficult.
The lawsuit, originally filed in May 2024 and updated with an amended complaint in September, alleged that the defendants marketed the products with “false claims” that buyers would receive “digital rewards, physical products, and exclusive access to events” in exchange for their cryptocurrency investments in eight quarterly “drops” over two years.
“Once the purchasers’ funds are used to purchase the NFTs, the developers abruptly abandon the project and fail to deliver the promised benefits all while fraudulently retaining the purchasers’ funds,” Plaintiff Luke Brown, a Culver City resident who lost $5,800 on the investment, alleged.
What was DGFamily?
The DGFamily project sold 5,000 NFT “boxes” for between 1.224 and 40 ETH, worth approximately $3,600 to $120,000 at launch, as per the lawsuit.
The lawsuit detailed a pattern of delays and failures, such as the first drop was “13 days after they had originally promised to release it.”
Even then, the digital outfits “were not even usable in DecentraLand until 11 days later” because the defendants “had failed to get approval from DecentraLand’s management before releasing said drops,” the filing said.
The lawsuit claimed the companies “are effectively the same company” because they shared key executives, office space, and business operations.
Judge Buchwald was particularly critical of the lawsuit’s “group pleading” approach.
“The operative pleading refers to both D&G USA and D&G S.R.L. as ‘Dolce & Gabbana’ and attributes all misconduct to this shared moniker, without differentiating what each entity did,” she wrote.
The judge also rejected Brown’s attempt to amend the complaint again, noting that Brown had already been given one opportunity to fix the deficiencies after the defendants outlined their objections in pre-motion letters.
Regarding the alter ego claims, Buchwald wrote that the plaintiff “must allege facts to support its conclusions” rather than simply “parrot the factors enumerated in the veil-piercing case law.”
What’s next?
While Dolce & Gabbana USA was the only US-based defendant that could be easily served, the original lawsuit also named Dubai-based UNXD Inc. and Italy-based Bluebear Italia SRL as defendants.
However, the court noted these entities “were not served with the complaint.”
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