DWF Labs Sues BitGo for $114 Million Over Alleged Token Sales Breach

DWF Labs subsidiaries DWF Maas and Falcon Digital have filed a $114 million lawsuit against cryptocurrency custodian BitGo, accusing the company of violating token lock-up agreements and triggering significant price declines, according to a Financial Times report on Friday.

The lawsuit, filed in London's High Court, alleges that BitGo breached contractual restrictions involving discounted sales of Falcon Finance (FF) and ESPORTS tokens.

DWF Maas, based in the British Virgin Islands, and Panama-based Falcon Digital claim BitGo agreed to purchase the cryptocurrencies at discounted prices under a mandatory three-month lock-up period.

Such agreements are widely used in the cryptocurrency industry to prevent investors from immediately selling newly acquired tokens, helping protect market stability and reduce selling pressure.

However, the plaintiffs allege that BitGo transferred and sold tokens before the restrictions expired, contributing to sharp declines in their market values.

Falcon Finance's FF token reportedly dropped from approximately $0.08 in early March to $0.07 by late April. Meanwhile, ESPORTS experienced a steeper decline, falling from around $0.28 in mid-March to $0.07 in early June.

DWF Labs is seeking $114 million in compensation, arguing that BitGo's alleged unauthorized token sales directly contributed to financial losses.

According to the Financial Times, DWF stated that BitGo received discounted tokens on the condition that they remained locked. However, the assets were allegedly transferred to cryptocurrency exchanges approximately two months before their scheduled release.

The company said it raised concerns with BitGo during April and May but pursued legal action after failing to secure assurances regarding compliance with the agreements.

The dispute comes as DWF Labs continues attracting attention for its cryptocurrency investments and political connections.

Last year, DWF purchased $25 million worth of WLFI tokens associated with World Liberty Financial, a cryptocurrency venture backed by U.S. President Donald Trump and his family.

That investment prompted scrutiny from Washington lawmakers over alleged Russian connections involving DWF founder Andrei Grachev, who previously led the Russian division of cryptocurrency exchange Huobi between 2018 and 2019.

The allegations against BitGo remain unproven, and the court has yet to determine whether the company violated its contractual obligations.

Neither DWF Labs nor BitGo immediately responded to CoinDesk's requests for comment.