DWF is seeking $114 million in damages, alleging that BitGo’s premature token sales caused financial losses by pushing down the market prices of the assets.
DWF Maas and Falcon Digital, two subsidiaries of cryptocurrency market maker DWF Labs, have filed a lawsuit against crypto custody firm BitGo BTGO $7.1400 over an alleged breach of token lock-up agreements, the Financial Times reported on Friday.
The firms claim they sold Falcon Finance tokens FF $0.1069 and ESPORTS tokens to BitGo at discounted rates under agreements requiring the assets to remain locked for three months. The legal action has been brought before London’s High Court.
Private token sales are a common fundraising method in the cryptocurrency sector. They allow projects to secure capital while restricting buyers from immediately selling their holdings for short-term gains.
DWF Maas, registered in the British Virgin Islands, and Panama-based Falcon Digital allege that BitGo violated the terms of the deals by transferring and selling the tokens before the lock-up periods expired. According to the firms, these transactions contributed to a decline in the tokens’ prices.
FF traded at approximately $0.08 when its lock-up began in early March but had fallen to around $0.07 by late April. ESPORTS declined from roughly $0.28 in mid-March to about $0.07 by early June. DWF is claiming $114 million in compensation, arguing that the alleged breaches caused direct losses as the tokens’ values fell.
“The discount BitGo received was conditional on the tokens remaining locked, and they were moved to exchanges roughly two months before the first unlock,” DWF said, according to the Financial Times.
The company said it raised its concerns with BitGo in April and May. However, after failing to secure a commitment from the custodian, DWF said it had to take the dispute to court.
DWF also invested $25 million in WLFI tokens last year. WLFI is the native token of World Liberty Financial, a cryptocurrency venture backed by U.S. President Donald Trump and his family.
The investment attracted attention from some lawmakers in Washington over alleged links between DWF founder Andrei Grachev and Russia. Grachev led the Russian division of cryptocurrency exchange Huobi from 2018 to 2019. Huobi has faced sanctions in several jurisdictions over allegations that it helped Russia evade Western sanctions.
Neither DWF nor BitGo immediately responded to CoinDesk’s request for comment.
