Dolce & Gabbana Under Fire in Class Action Over Botched NFT Deliveries

NFTs don’t have the same level of clout that they did a few years ago, and the fallout from the mainstream boom and bust in the NFT market continues to plague some brands that have made the move. The number of companies being scrutinized for NFT strategies has increased this month to include Dolce & Gabbana.

The luxury fashion brand was named as a defendant in a class-action lawsuit alleging it made unfulfilled promises when selling NFTs. The complaint also names UNXD, an NFT marketplace that allegedly facilitates Dolce & Gabbana’s NFT drops and transactions, as a defendant.

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Lead plaintiff Luke Brown filed the lawsuit in New York’s Southern District Court earlier this month, alleging that DGFamily purchased Dolce & Gabbana NFTs. According to the complaint, Brown spent $6,000 on DGFamily assets, claiming that “purchasers would then receive benefits including digital rewards, physical products, and exclusive access to events, among other things.”

But according to Brown and his lawyer, Dolce & Gabbana never achieved many of the benefits it promised, and delivery of NFTs was delayed.

According to the complaint, “[Dolce & Gabbana] never provided a complete set of products [Brown] “Despite repeatedly promising that the products would be delivered, he inevitably kept postponing the delivery date, but was secured by digital asset purchases.”

According to court documents, the launch of NFTs was delayed due to the products not being accepted on the UNXD marketplace, which it did not disclose to investors at the time. Brown claims that in June 2022, companies announced the first of eight benefits investors will receive.

“The first drop…consisted of digital suits available only on a metadata platform called Decentraland, which has virtually no users,” the complaint states.

One of the long-standing complaints of metaverse users is that platforms do not support the transferability of digital assets; for example, if a user has a digital asset in Decentraland, they cannot transfer that asset to Roblox, another metaverse platform. This appears to be a complaint among DGFamily investors, according to Brown’s complaint. Brown also claims that Dolce & Gabbana and UNXD failed to obtain the necessary permissions from Decentraland management before releasing their drops, causing a delay for investors interested in using the digital products.

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Brown alleges a later drop in the complaint stating that the companies, referred to as the “Realtà Parallela collection,” planned to ship real-life products to investors; However, according to the complaint, many investors never received their packages and those who did were exposed to customs and duty fees.

Brown claimed that he lost $5,800 (allegedly almost 97 percent of his original investment) because the value of his DGFamily NFTs depreciated too quickly. A class-action lawsuit accuses Dolce & Gabbana and UNXD of fraud, breach of contract, negligence and more.

The complaint alleges that Dolce & Gabbana “manipulated the digital currency market for its DGFamily Products to its own advantage by employing ‘pulling’.”

In the type of transaction Brown has discussed throughout the case, rug-pulling typically means a company cancels a project after the currency arrives, profiting from consumers’ cryptocurrency investments but not providing the purported benefits an NFT markets. such as allowing access.

And Brown believes Dolce & Gabbana and UNXD did just that in this case, saying the companies chose to “abandon” the project almost entirely.

“Upon information and belief, the defendants decided to forego an expensive and time-consuming process to complete or support the DGFamily project and instead deliberately undertook a fraudulent scheme. [Brown] and other consumers,” the complaint alleges, stating that the companies’ “standard operating procedure is to promise products they fail to deliver before abandoning a project and community they have promised to support.”

This is far from Dolce & Gabbana’s only questionable business practice for consumers. In 2018, the brand faced intense scrutiny in the Chinese market for what many called racist advertising; This was further exacerbated by screenshots of Instagram direct messages containing more derogatory comments about China, allegedly from company co-founder Stefano Gabbana.

Even before that, according to New York Magazine, the company left an unpleasant taste in the mouth of consumers by naming one of its products “Slave Sandal” in 2016, and in 2012, it sent white models resembling silver earrings to the catwalks. The Blackamoor statues “have become an image that romanticizes slavery and plantation life,” according to the Guardian.

Neither Dolce & Gabbana nor Brown’s attorney responded to Sourcing Journal’s request for comment on the case.