Two investment entities operating under the DWF Labs group have officially brought crypto custodian BitGo before London’s High Court. DWF Maas, a British Virgin Islands-based entity, alongside Falcon Digital from Panama, filed a lawsuit seeking $141 million in total claims. Of that total amount, $114 million is sought specifically as damages for direct losses incurred from the collapse of token prices on open exchanges.
The civil dispute stems from a digital asset purchase agreement. DWF claims to have sold supplies of Falcon Finance (FF) and ESPORTS tokens to BitGo. Under the terms of the deal, the assets were acquired at a discount, subject to a mandatory supply restriction requiring a full three-month lock-up period for the buyer.
Premature Sales Depress Prices
The lock-up period, intended to curb a surge in new circulating supply on the open market, failed to work as planned. According to court filings, BitGo breached the lock-up clauses. The crypto custodian is accused of promptly moving and executing sales of tokens that were supposed to remain locked onto public exchanges.
The liquidations occurred well ahead of the agreed schedule. BitGo allegedly began offloading token reserves roughly two months before the initial unlock date arrived. The unauthorized release of supply triggered consecutive waves of selling pressure that eroded the open-market valuations of both tokens.
The impact of the custodian’s alleged early sales struck market prices immediately. The FF token, which traded at around 8 cents in early March, gradually slumped to touch 7 cents by late April. The ESPORTS token suffered an even steeper correction, tumbling from around 28 cents in mid-March to just 7 cents by early June.
Two Months of Fruitless Warnings
Open litigation in the English courts was not DWF’s first choice. As token prices deteriorated on public exchanges, the plaintiffs stated they sent written notices to BitGo throughout April and May demanding an end to all token-selling activities in breach of the original agreement.
Unfortunately, the warnings failed to halt the outflow of tokens. DWF stated that it received no adequate response from BitGo management regarding the notices. Facing asset depreciation exceeding hundreds of millions of dollars and with mediation exhausted, DWF Maas and Falcon Digital filed a formal civil lawsuit in London.
For industry participants, the standoff between BitGo and DWF once again highlights the real risks in high-volume over-the-counter deals. When discounted purchase agreements collide with breaches of supply lock-up terms, the outcome can escalate into a hundred-million-dollar courtroom battle. Reported by CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
