DWF Labs Arms Sue BitGo in London Over Alleged Token Lock Up Breach

Two investment subsidiaries of market maker DWF Labs, DWF Maas and Falcon Digital, have filed a lawsuit against crypto custodian BitGo in London’s High Court, according to a Friday report from the Financial Times. They say they agreed to sell Falcon Finance (FF) and ESPORTS tokens to BitGo at a discount, on the condition that the tokens stayed locked for three months.

The companies claim BitGo sold them before those lock-up periods ended, which pushed prices down. DWF said the discount depended on the tokens remaining locked and that they were moved to exchanges about two months before the first unlock. It added that it raised the issue with BitGo in April and May and went to court when no undertaking followed.

Token Price Falls and Damages Claim

DWF is seeking $114 million in damages, arguing the sales caused direct losses as prices dropped. FF slid from about 8 cents at the start of the lock-up in early March to around 7 cents by late April, while ESPORTS fell from roughly 28 cents in mid-March to 7 cents by early June. Private token sales are common in the industry because they let projects raise capital without buyers dumping tokens right away.

DWF Labs Background and Political Scrutiny

DWF bought $25 million of WLFI tokens last year, the native asset of Trump family backed World Liberty Financial. The deal drew concern from some US lawmakers over founder Andrei Grachev’s alleged Russian links. Grachev led Huobi’s Russian arm in 2018 and 2019, and Huobi has since been sanctioned in several jurisdictions for helping Russia evade Western sanctions. Neither DWF nor BitGo responded immediately to requests for comment.