BitGo sued for $141M by DWF Labs-linked firms over early token sales

BitGo has been sued for $141 million by two companies linked to DWF Labs over allegations that the crypto custodian sold restricted tokens before their agreed release dates, causing losses to the sellers.

The Financial Times reported on October 9 that DWF Maas and Falcon Digital filed the lawsuit in London’s High Court, accusing BitGo of breaching private token sale agreements involving Falcon Finance (FF) and ESPORTS tokens. The companies claim the disputed sales pushed token prices lower and reduced the value of their remaining holdings.

The legal action was reported by Law360 on October 2, before the Financial Times published further details. BitGo declined to comment on the allegations, which have not been established as facts by the court.

DWF Labs-linked firms accuse BitGo of breaking token sale agreements

At the center of the dispute are over-the-counter (OTC) transactions involving cryptocurrency tokens sold under contractual trading restrictions. DWF Maas and Falcon Digital claim BitGo acquired the assets under agreements requiring them to remain locked for a specified period.

FT: DWF Labs Sues BitGo for $141 Million Over Alleged Early Sales of Locked Tokens

According to the Financial Times, DWF Labs affiliates DWF Maas and Falcon Digital have sued crypto custodian BitGo in London's High Court, seeking $141 million in damages. The plaintiffs allege… pic.twitter.com/DIJyoWQlOf

— Wu Blockchain (@WuBlockchain) October 9, 2026

According to the Financial Times, the arrangements involved an initial three-month lock-up, followed by further vesting conditions limiting when the tokens could be sold. The plaintiffs allege BitGo disposed of tokens before the restrictions expired, violating the terms attached to the purchases.

The agreements reportedly involved discounted token transactions, a structure in which buyers receive assets under negotiated terms that may prevent immediate resale. In the lawsuit, the DWF-linked companies argue that BitGo failed to honor the restrictions governing when the acquired tokens could enter the market.

Their claim concerns two digital assets, Falcon Finance’s FF token and ESPORTS. The plaintiffs maintain that the alleged early sales increased the amount of tokens available for trading before the agreed release dates.

DWF Maas and Falcon Digital are seeking compensation for losses they attribute to the transactions. However, the reported $141 million represents the damages requested by the plaintiffs, not a court-ordered payment or an independently established valuation of the alleged losses.

The publicly accessible reports do not establish the full quantities sold, the prices received by BitGo or the exact dates of each disputed transaction. Those details would be necessary to compare the alleged trading activity with the contractual release schedules.

Why are DWF Labs-linked companies seeking $141 million?

According to the plaintiffs, the alleged breach affected their remaining token holdings because selling large quantities before the agreed dates placed downward pressure on market prices.

The companies argue that the restrictions were part of the original OTC arrangements and that their violation caused financial damage. Their requested compensation is based on the losses they attribute to BitGo’s conduct, although the full damages calculation has not been independently verified.

A lock-up agreement generally prevents a buyer from selling or transferring specified assets for a contractual period. Vesting conditions can extend the restrictions by releasing portions of the purchased tokens over a scheduled period.

In the disputed transactions, the plaintiffs say the initial restrictions and later vesting requirements formed part of BitGo’s contractual obligations. The court will need to examine the agreements and the alleged transactions before determining whether any breach occurred.

The case has drawn attention to the private token transactions conducted by firms involved in cryptocurrency market making. DWF Labs, founded in 2022, operates in digital asset trading and investment, while its affiliated companies participate in deals involving token issuers and other market participants.

Although the Financial Times identified the parties and assets involved, publicly verified blockchain evidence establishing the specific BitGo sales has not emerged from the material reviewed for this report. The available information therefore does not establish whether the alleged transactions caused the claimed price losses.

ESPORTS token previously faced a sharp market selloff

The lawsuit concerns an asset that experienced substantial selling pressure earlier in 2026. In May, ESPORTS suffered a price collapse of more than 90% within roughly two hours, following large token movements involving project-linked wallets.

Blockchain analysis published at the time identified approximately 178 million ESPORTS tokens moving into trading activity worth roughly $12.76 million. Part of the movement involved addresses associated with DWF Labs, including transfers through Kraken.

The earlier report identified approximately 19.9 million ESPORTS tokens, valued at $13.9 million at the time, that had been transferred to a DWF-linked Kraken address before the collapse. However, the on-chain movements did not establish that every transferred token had been sold or identify BitGo as the party responsible for the transactions.

The May selling activity has not been independently connected to the transactions disputed in the London lawsuit. Neither the Financial Times report nor the publicly accessible Law360 summary establishes that the earlier ESPORTS crash resulted from the alleged contractual breach.

Falcon Finance has separately maintained business ties with DWF Labs. In July 2025, the project’s co-founder, Andrei Grachev, said Falcon had withdrawn funds from centralized exchanges as part of changes to its asset management arrangements.

Grachev said the team had obtained an independent auditor’s attestation concerning those withdrawals. The announcement concerned Falcon’s custody arrangements and did not address the later allegations against BitGo.

BitGo faces separate legal cases following its U.S. IPO

The London lawsuit is not BitGo’s only ongoing legal dispute. The U.S.-based digital asset company has been involved in litigation with Galaxy Digital over their abandoned $1.2 billion acquisition agreement, which the companies originally announced in 2021.

In May 2026, Galaxy founder Mike Novogratz appeared in Delaware Chancery Court during proceedings concerning the failed transaction. BitGo is seeking at least $100 million over Galaxy’s decision to terminate the acquisition in August 2022.

The BitGo and Galaxy Digital court dispute centers on contractual obligations involving financial statements and accounting requirements. Galaxy has disputed BitGo’s claim, maintaining that it was entitled to terminate the transaction under their agreement.

BitGo’s quarterly filing with the U.S. Securities and Exchange Commission confirmed that the trial ran from May 18 to May 22, 2026. At the time of that filing, the company was awaiting a court decision.

The same filing disclosed a separate shareholder lawsuit filed in June 2026 in the U.S. District Court for the Eastern District of New York. The case, Jacques Arsenault v. BitGo Holdings, Inc., et al., concerns alleged securities law violations connected to BitGo’s January 2026 initial public offering and statements made during the period identified in the complaint.

The shareholder plaintiff is seeking unspecified damages, legal fees and other costs. BitGo disclosed that the deadline for motions seeking appointment as lead plaintiff was August 7, with further proceedings expected following the appointment of lead counsel.

In the new London case, no public court ruling establishing liability has been identified as of October 9. The next substantive procedural developments will depend on BitGo’s formal response and the court’s handling of the contract dispute. No verified hearing date or deadline for BitGo’s defense was available in the reports reviewed.