DWF Labs Subsidiaries Sue BitGo for $141M Over Alleged Token Lock-Up Violation

DWF is demanding $114 million in compensation, arguing that BitGo’s token sales caused direct financial losses by driving down the prices of the assets.

Investment firms DWF Maas and Falcon Digital, subsidiaries of crypto market maker DWF Labs, have filed a lawsuit against cryptocurrency custody provider BitGo BTGO $7.1400 over an alleged violation of token sale lock-up agreements, the Financial Times reported Friday.

The two subsidiaries claim they agreed to sell Falcon Finance tokens FF $0.1069 and ESPORTS tokens to BitGo at discounted prices, provided the assets remained locked for three months. The lawsuit was filed in London’s High Court.

Private token sales are widely used across the digital asset sector to help projects raise funds while preventing investors from immediately selling their holdings for short-term profits.

DWF Maas, based in the British Virgin Islands, and Panama-based Falcon Digital allege that BitGo violated the agreements by selling the tokens before the lock-up periods ended, contributing to declines in their market prices.

Falcon Finance’s FF token dropped from $0.08 when its lock-up began in early March to approximately $0.07 by late April. Meanwhile, ESPORTS fell from around $0.28 in mid-March to $0.07 by early June. DWF is seeking $114 million in damages, claiming the early sales directly contributed to the price declines and the resulting losses.

According to the Financial Times, DWF stated: “The discount BitGo received was conditional on the tokens remaining locked, and they were moved to exchanges roughly two months before the first unlock.”

The firm added that it raised the issue with BitGo in April and May but received no commitment to resolve the matter, leaving it with no choice but to pursue legal action.

Last year, DWF purchased $25 million worth of WLFI tokens, the native cryptocurrency of World Liberty Financial, a digital asset project backed by U.S. President Donald Trump and his family.

That investment attracted scrutiny from some U.S. lawmakers over alleged connections between DWF founder Andrei Grachev and Russia. Grachev served as chief executive of crypto exchange Huobi’s Russian division from 2018 to 2019. Huobi has faced sanctions in several jurisdictions over allegations that it helped Russia circumvent Western restrictions.

Neither DWF nor BitGo immediately responded to CoinDesk’s request for comment.