$141M Legal Battle: DWF Labs Affiliates Accuse BitGo of Breaking Token Lock-Up Terms

DWF Labs affiliates are seeking $114 million in compensation from BitGo, accusing the crypto custodian of violating token lock-up contracts and causing losses as the affected assets declined in value.

DWF Maas and Falcon Digital, investment subsidiaries of crypto market maker DWF Labs, have filed a lawsuit against BitGo BTGO $7.1400 in London’s High Court, according to a Friday report from the Financial Times.

The dispute involves discounted sales of Falcon Finance tokens FF $0.1069 and ESPORTS tokens. The two firms allege that BitGo agreed to a three-month lock-up period as a condition of receiving the tokens at reduced prices but sold the assets before the restrictions expired.

Private token sales are frequently used by crypto projects to raise funding. Lock-up arrangements help prevent buyers from immediately reselling their discounted holdings, which could put downward pressure on token prices.

DWF Maas, based in the British Virgin Islands, and Panama-based Falcon Digital claim that BitGo breached its contractual obligations by selling the tokens ahead of schedule. They argue that the transactions contributed to substantial price declines.

Falcon Finance’s FF token fell from around $0.08 in early March, when the lock-up period began, to approximately $0.07 by late April. ESPORTS declined from roughly $0.28 in mid-March to about $0.07 in early June. DWF is seeking $114 million in damages, claiming the price drops caused direct financial losses following the alleged breaches.

DWF said BitGo’s discounted purchase price depended on the tokens remaining locked. As reported by the Financial Times, the firm alleged that the assets were transferred to exchanges roughly two months before the first permitted unlock date.

The firm said it contacted BitGo about the alleged violations in April and May. It claims that when no commitment was provided, legal proceedings became necessary.

In a separate investment, DWF purchased $25 million worth of WLFI tokens last year. WLFI is the native token of World Liberty Financial, a crypto project backed by U.S. President Donald Trump and his family.

The investment raised concerns among some U.S. lawmakers about alleged ties between DWF founder Andrei Grachev and Russia. Grachev led crypto exchange Huobi’s Russian business from 2018 to 2019. Huobi has faced sanctions in several jurisdictions over allegations that it helped Russia circumvent Western sanctions.

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