DWF Labs subsidiaries DWF Maas and Falcon Digital are suing cryptocurrency custodians BitGo BTGO 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 FF$0.1061 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.