DWF Labs subsidiaries DWF Maas and Falcon Digital are suing cryptocurrency custodians BitGo over an alleged breach of a token sale’s lock-up terms, the Financial Times reported on Friday.
The two investment subsidiaries of market maker DWF Labs allege they agreed to sell Falcon Finance tokens and ESPORTS tokens at a discount to BitGo, which would be subject to a three-month lock-up period, in a lawsuit filed in London’s High Court.
Private token sales are common in the digital asset industry as a means for issuers to raise capital for projects without worrying that buyers will immediately dump the tokens to make a quick buck.
British Virgin Islands-based DWF Maas and Panama-based Falcon Digital claim that BitGo breached its contracts by selling digital tokens before the agreed lock-up periods expired, causing their prices to fall.
FF fell from 8 cents at the start of the lock-up in early March, to around 7 cents by late April, while ESPORTS fell from about 28 cents in mid-March to 7 cents in early June. DWF is seeking $114 million in damages on the basis BitGo’s token sales resulted in direct losses through the fall in both tokens’ prices.
“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 said, according to the FT’s report.
“We raised this with BitGo in April and May, and with no undertaking forthcoming, court action became necessary.”
DWF bought $25 million of WLFI tokens last year , the native asset of World Liberty Financial, the cryptocurrency project backed by President Donald Trump and his family.
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