Crypto Market Maker DWF Labs' Subsidiary Sues Custodian Giant BitGo: Early Token Sell-off Triggers Market Crash

According to the Financial Times, DWF Maas and Falcon Digital, subsidiaries of the well-known crypto market maker DWF Labs, have filed a lawsuit in the High Court of London against the crypto asset custodian BitGo. The core dispute revolves around an over-the-counter (OTC) agreement reached earlier between the parties. The plaintiffs allege that BitGo purchased Falcon Finance (FF) and ESPORTS tokens at a specific discounted price, with the core condition being a strict three-month lock-up period.

However, the plaintiffs accuse BitGo of violating this agreement by prematurely depositing the aforementioned tokens onto trading platforms and conducting concentrated sell-offs approximately two months before the initial unlock period. In a market environment already suffering from a lack of trading depth, this breach of contract led to a significant liquidity shock, drastically reducing the book value of the plaintiffs' remaining positions.

Price Plunge Leads to Legal Action

According to market data compiled by CoinDesk, this incident has significantly suppressed token pricing. The FF token was priced at approximately $0.08 when the lock-up agreement took effect in early March, but had dropped to $0.07 by the end of April; the decline for the ESPORTS token was even more severe, plummeting from a high of $0.28 in mid-March to around $0.07 by early June.

DWF representatives confirmed to the media that the absolute prerequisite for obtaining discounted tokens was adherence to the lock-up commitment. The management team had previously negotiated with BitGo regarding the abnormal price movements of the tokens in April and May of that year but failed to secure compliance commitments from the other party, ultimately resorting to legal action seeking over $141 million in economic damages. BitGo has chosen to remain silent regarding the allegations of market expectation disruption, and the specific case details await further factual determination by the court.

Both Parties Have Strong Backgrounds

From a corporate structure perspective, the suing parties DWF Maas and Falcon Digital are registered in the British Virgin Islands and Panama, respectively, while their parent company DWF Labs is headquartered in Dubai, serving as a highly active liquidity provider and investment institution in the digital asset space. The defendant, BitGo, is a long-established licensed custodian that not only successfully listed on the New York Stock Exchange this year but also recently fully acquired NYDIG's institutional trading terminal.

Decrypt analysis points out that these litigation adversaries are closely linked to the decentralized finance project World Liberty Financial, which is backed by the Trump family. Public records show that DWF Labs invested $25 million in the WLFI token of this project in 2025, while BitGo is responsible for custodian services for the underlying reserves of the USD1 stablecoin, and World Liberty is currently taking over this business through a newly approved trust bank.

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