DWF Labs Sues BitGo Over Alleged Pre-Unlock Sales of Two Altcoins

Two DWF Labs subsidiaries have sued BitGo in London, alleging that two altcoins they sold at a discount were disposed of before their lockup periods expired, causing their prices to fall.

According to a CoinDesk report citing the Financial Times, DWF Maas and Falcon Digital accuse crypto custodian BitGo of breaching token sale agreements. The dispute, brought before the High Court of London, centers on the Falcon Finance (FF) and ESPORTS tokens.

A three-month lockup in exchange for a discount

The DWF subsidiaries say they sold the tokens to BitGo at a discount, on the condition that it honor a three-month lockup period. In these types of private sales, lockup periods are used to prevent buyers from immediately selling discounted tokens on the market.

According to the companies, the tokens were transferred to exchanges about two months before the initial unlock and sold before the agreed period had expired. DWF argues that these sales pushed prices down and directly harmed the companies.

The altcoins’ declines are at the heart of the lawsuit

According to historical prices cited in the report, FF fell from 8 cents at the start of the lockup period in early March to about 7 cents at the end of April. ESPORTS dropped from about 28 cents in mid-March to 7 cents in early June, a decline of about 75 percent.

DWF said it discussed the matter with BitGo in April and May, but went to court after failing to secure a commitment. The subsidiaries are seeking compensation for losses they claim resulted from the price declines.

The alleged impact of the early sales on prices is an allegation brought before the court by the plaintiffs. At the time the report was published, DWF and BitGo had not responded to CoinDesk’s requests for comment.