Yesterday Lily Robotics, the company behind the waterproof subject-tracking Lily Drone, announced that it was ceasing operation after failing to secure necessary funding, despite $34m worth of pre-orders. Now it looks like there's more to that story: the company has been sued by the San Francisco district attorney’s office over claims of false advertising and unfair business practices.

After a lengthy investigation the attorney's office alleged that the promotional video, which was used during the initial crowdfunding campaign for the Lily Drone, had not been shot with an actual prototype of the device but a “much more expensive, professional camera drone that requires two people to operate.”

“It does not matter if a company is established or if it is a startup,” District Attorney George Gascón said on Thursday. “Everyone in the market must follow the rules. By protecting consumers, we protect confidence in our system of commerce.”

On its website and in a letter to pre-order customers, Lily Robotics promised it would be issuing refunds to customers over the next 60 days but now the attorney's office has also obtained an order from a judge requiring the company to return all the money it received from customers and not use it for other purposes. Lily had received approximately 60,000 pre-orders at between $499 and $899 each.