DWF Labs' subsidiaries, DWF Maas and Falcon Digital, have initiated legal proceedings against cryptocurrency custodian BitGo, claiming $141 million for an alleged violation of token lock-up agreements.
The lawsuit seeks $114 million in damages due to losses linked to token price declines.
According to a report by the Financial Times, the lawsuit has been filed in London's High Court, alleging that BitGo sold discounted Falcon Finance (FF) and ESPORTS tokens prior to the expiration of their three-month lock-up periods.
The two subsidiaries contend that the early sales of these tokens led to significant price drops. Specifically, FF's price fell from approximately 8 cents at the beginning of March to about 7 cents by late April, while ESPORTS dropped from roughly 28 cents in mid-March to 7 cents by early June. DWF is pursuing $114 million in damages, asserting that BitGo's actions directly caused these financial losses.
DWF claims that they raised concerns with BitGo in April and May but felt compelled to pursue legal action when the custodian did not respond adequately.
“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 stated, as reported by the Financial Times.
In a related context, DWF made a notable investment of $25 million in WLFI tokens last year, which are associated with World Liberty Financial, a cryptocurrency initiative backed by former President Donald Trump and his family. This investment has attracted scrutiny from some U.S. lawmakers, particularly due to concerns regarding DWF's founder, Andrei Grachev, who previously led the Russian branch of crypto exchange Huobi. Huobi has faced sanctions in various regions for allegedly facilitating Russian evasion of Western sanctions.
Neither DWF nor BitGo has yet responded to requests for comments regarding the lawsuit.