DWF Labs Affiliates Sue BitGo for $114 Million Over Alleged Token Lock-Up Breach

Preface

Two investment subsidiaries of digital-asset market maker DWF Labs have filed a lawsuit against cryptocurrency custodian BitGo in London. DWF Maas and Falcon Digital allege that BitGo sold Falcon Finance (FF) and ESPORTS tokens before the end of agreed three-month lock-up periods. They argue that the early sales violated the terms of their arrangements and contributed to falling token prices. The companies are seeking $114 million in damages, saying the price declines caused direct losses. DWF says it raised its concerns with BitGo in April and May, but took the dispute to court after it did not receive an undertaking. The case highlights the role of lock-up conditions in private token sales, where restrictions are intended to prevent investors from selling immediately after acquiring discounted assets.

Lazy bag

DWF Maas and Falcon Digital claim BitGo breached token-sale agreements by moving FF and ESPORTS tokens to exchanges before their three-month lock-ups expired. They say the sales contributed to sharp price declines and are seeking $114 million in damages. DWF states that it raised the matter in April and May before pursuing legal action. The dispute puts the terms and enforcement of private token-sale lock-ups in focus, while the allegations remain claims to be resolved through the legal process.

Main Body

DWF Maas and Falcon Digital, investment subsidiaries of market maker DWF Labs, have sued cryptocurrency custodian BitGo in London over alleged violations of token lock-up terms. According to a report by the Financial Times, the lawsuit was filed in London’s High Court. The subsidiaries say they agreed to sell Falcon Finance tokens FF and ESPORTS tokens to BitGo at a discount, on the condition that the tokens would remain locked for three months. They allege BitGo sold or moved the tokens to exchanges before the agreed periods had ended.

The companies are seeking $114 million in damages. Their claim is based on alleged direct losses arising from the decline in the prices of both tokens. The lawsuit concerns whether BitGo complied with the restrictions attached to the discounted token transactions and whether any early sales contributed to the subsequent market falls. These are allegations made by the plaintiffs; the filing itself does not establish that BitGo breached its agreements.

Lock-up periods are commonly used in private digital-asset sales. Projects and token holders may offer tokens at a discount to selected buyers while requiring them to hold the assets for a specified period. Such restrictions can help issuers raise capital while limiting the risk that recipients will sell immediately and place downward pressure on the market price. The specific terms depend on the parties’ contracts, including when a lock-up begins, what transfers are permitted, and whether tokens may be moved to exchanges before they become freely transferable.

In this dispute, DWF Maas is based in the British Virgin Islands, while Falcon Digital is based in Panama. The companies contend that BitGo’s alleged sales before the lock-up periods expired caused the tokens’ prices to fall. The reported price movements provide context for the damages claim, though price changes in digital-asset markets can have multiple causes. The lawsuit attributes losses to BitGo’s alleged conduct; determining the extent of any causal link will be part of resolving the case.

FF reportedly traded at 8 cents at the start of its lock-up in early March and was around 7 cents by late April. ESPORTS reportedly fell from about 28 cents in mid-March to 7 cents in early June. DWF argues that BitGo’s early sales contributed to these declines and says the resulting losses justify its requested damages. The figures describe the price movements cited in the report and are not, by themselves, a legal finding about responsibility for those movements.

DWF’s account of the agreement focuses on the connection between the discount and the restrictions. As reported by the Financial Times, DWF said: “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 statement presents the plaintiffs’ interpretation of the deal: BitGo received a lower price in return for observing the lock-up. The parties’ written agreements and evidence about the token transfers will be important to evaluating that interpretation.

DWF also described its attempts to address the matter before filing suit. The company said it raised the issue with BitGo in April and May. According to DWF, it pursued court action after no undertaking was forthcoming. An undertaking would have provided an assurance or commitment from BitGo concerning the disputed conduct. The account reflects DWF’s position; BitGo had not publicly responded to the allegations in the source report.

The dispute illustrates why lock-up provisions can be significant in digital-asset transactions. A buyer’s ability to transfer tokens may depend not only on technical access to the assets but also on contractual promises made during a sale. Where a seller alleges that tokens were moved or sold too soon, a court may need to examine the contract language, transaction records, timing, and the parties’ communications. It may also need to assess how alleged transfers relate to market prices and the losses claimed. The available account does not describe a court ruling or establish the final outcome.

The report also places the lawsuit alongside DWF’s other activity in the digital-asset sector. DWF bought $25 million of WLFI tokens last year. WLFI is the native asset of World Liberty Financial, a cryptocurrency project backed by President Donald Trump and his family. That investment drew concern from some lawmakers in Washington, D.C., over alleged links between DWF founder Andrei Grachev and Russia.

Grachev was CEO of the Russian arm of cryptocurrency exchange Huobi between 2018 and 2019. Huobi has been sanctioned in various jurisdictions for helping Russia evade Western sanctions. The source presents these details as background to the public scrutiny surrounding DWF; they do not determine the merits of the separate dispute with BitGo.

Neither DWF nor BitGo immediately responded to CoinDesk’s request for comment. The lawsuit therefore remains described primarily through the claims reported from DWF and the Financial Times account. Further responses, court filings, or judicial decisions could add detail about the agreements and the alleged token movements. Until the claims are tested, the alleged breach and the asserted connection between BitGo’s conduct and the price declines should be treated as contested matters.

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