Falcon

Million

Falcon Finance

Dollars

Token

Two digital asset companies <a style="color: #0000ff;" href="https://www.ft.com/content/e08fbdee-8268-4eb8-99b4-5f7089749d59?syn-25a6b1a6=1" rel="noopener noreferrer nofollow">connected</a> to DWF Labs have filed a 141 million dollar lawsuit against the cryptocurrency storage firm BitGo. The legal dispute, which is now sitting in a London court, claims that BitGo secretly sold off Falcon Finance and ESPORTS digital coins, nearly two months before their strict holding periods were supposed to end.
<blockquote class="twitter-tweet">
 INTEL: DWF Labs-linked firms sue BitGo for $141 million, alleging it sold locked tokens early and caused heavy losses https://t.co/uAlK7LAhEZ
 — Solid Intel <img src="https://s.w.org/images/core/emoji/17.0.2/72x72/1f4e1.png" alt="📡" style="height: 1em; max-height: 1em;"> (@solidintel_x) <a href="https://x.com/solidintel_x/status/2108452616246358309?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 9, 2026</a>
</blockquote>
The court documents explain that DWF sold these tokens to BitGo at a special discount. In exchange for the lower price, BitGo signed a legal promise to lock the coins away for at least three months to keep the digital market stable. However, BitGo allegedly broke this rule and moved the coins to a public exchange early. This sudden flood of unexpected coins caused a huge price crash, completely destroying the value of the remaining tokens that DWF still held.
READ ALSO: <a style="color: #0000ff;" href="https://defi-planet.com/2026/06/bitgo-cuts-nearly-15-of-workforce-as-it-builds-focus-on-crypto-infrastructure/" rel="noopener noreferrer nofollow">BitGo Cuts Nearly 15% of Workforce as it Builds Focus on Crypto Infrastructure</a>
<h3 id="span-style-font-weight-400-bitgo-s-role-in-otc-deals-raises-questions-about-token-lockups-span">BitGo’s role in OTC deals raises questions about token lockups</h3>
When large institutional investors buy massive amounts of a new coin, they hire a neutral, independent security company to hold the assets and strictly enforce the waiting period.&nbsp;
However, instead of using a neutral lock-up service, BitGo allegedly required its trading partners to use its own internal security vaults for the transaction.&nbsp;
An X trader, @0xPeter, <a style="color: #0000ff;" href="https://x.com/0xPeter/status/2108426832248725897" rel="noopener noreferrer nofollow">claimed</a> that BitGo’s approach creates a potential conflict of interest by allowing the company to control the custody arrangements for tokens it buys, rather than relying on an independent party to enforce the lockup.
<blockquote class="twitter-tweet">
 if you guys dont know bitgo is one of three otc buyers who requires they custody locked tokens instead of using streamflow or a neutral third party
 “just trust us” lol
 — 0xPeter (@0xPeter) <a href="https://x.com/0xPeter/status/2108426832248725897?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 9, 2026</a>
</blockquote>
A legal commentator, @web3counsels, <a style="color: #0000ff;" href="https://x.com/Web3Counsels/status/2108426258895843554" rel="noopener noreferrer nofollow">argued</a> that the case will depend on BitGo’s contractual role and responsibilities, particularly whether it acted as a buyer or simply held tokens on another party’s behalf, with the London court expected to examine the agreement to determine its obligations.
<blockquote class="twitter-tweet">
 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 that BitGo breached OTC agreements by selling Falcon Finance (FF) and ESPORTS tokens before their agreed lock-up periods expired, putting downward pressure on token prices and reducing the value of DWF’s remaining holdings. The agreements included an initial three-month lock-up followed by additional vesting restrictions. BitGo declined to comment on the lawsuit. The allegations have not been proven in court.
 — Wu Blockchain (@WuBlockchain) <a href="https://x.com/WuBlockchain/status/2108420972739244529?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 9, 2026</a>
</blockquote>
<h3 id="span-style-font-weight-400-why-bitgo-s-token-lockup-leaves-retail-investors-exposed-span">Why BitGo’s token lockup leaves retail investors exposed&nbsp;</h3>
In crypto deals, a token lockup is only as strong as the system used to enforce it. Some companies, such as Streamflow and Sablier, use smart contracts to lock tokens and restrict transfers until an agreed date. Others, such as DWF Labs and BitGo in the disputed OTC deal, rely on legal agreements that require both parties to follow the agreed holding period. But signing an agreement does not stop a company from moving its tokens. If one side breaks the deal, the other may have to go to court to prove what went wrong and seek compensation.&nbsp;
A market observer, @raintures, <a style="color: #0000ff;" href="https://x.com/raintures/status/2108464338121957507" rel="noopener noreferrer nofollow">highlighted</a> a concern, arguing that token lockups offer little protection if the parties involved cannot reliably enforce them. The concern is also whether restrictions on companies that use smart contracts or legal agreements can be monitored and enforced in practice. The BitGo lawsuit brings that question into focus, with the court expected to examine the terms of the agreement and the responsibilities each party accepted.
<blockquote class="twitter-tweet">
 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 that BitGo breached OTC agreements by selling Falcon Finance (FF) and ESPORTS tokens before their agreed lock-up periods expired, putting downward pressure on token prices and reducing the value of DWF’s remaining holdings. The agreements included an initial three-month lock-up followed by additional vesting restrictions. BitGo declined to comment on the lawsuit. The allegations have not been proven in court.
 — Wu Blockchain (@WuBlockchain) <a href="https://x.com/WuBlockchain/status/2108420972739244529?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 9, 2026</a>
</blockquote>
<h3 id="span-style-font-weight-400-what-happens-next-for-bitgo-span">What happens next for BitGo?</h3>
The case could push companies to rethink how they handle large crypto deals. Investors may become less willing to rely on agreements alone when the buyer also controls the locked tokens.
Some may prefer independent custody providers or smart contracts that prevent tokens from being moved before the agreed date. Meanwhile, BitGo is <a style="color: #0000ff;" href="https://defi-planet.com/2026/06/bitgo-expands-mica-compliant-crypto-services-across-europe/" rel="noopener noreferrer nofollow">expanding</a> its MiCA-compliant infrastructure services across Europe as the European Union moves closer to a major regulatory deadline for the digital asset industry.
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The post <a rel="noopener noreferrer nofollow" href="https://defi-planet.com/2026/10/two-crypto-firms-sue-bitgo-for-141-million-dollars-over-early-token-sales/">Two Crypto Firms Sue BitGo For 141 Million Dollars Over Early Token Sales</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://defi-planet.com">DeFi Planet</a>.

Two Crypto Firms Sue BitGo For 141 Million Dollars Over Early Token Sales

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