According to a report by the Financial Times on Friday, DWF Labs's investment subsidiaries DWF Maas and Falcon Digital are suing the crypto custody firm BitGo BTGO in London, accusing it of violating the lock-up terms in a token sale transaction.

These two investment subsidiaries stated that they had agreed to sell Falcon Finance tokens, FF tokens, and ESPORTS tokens to BitGo at a discounted price, but these tokens were subject to a three-month lock-up period. The lawsuit has been filed with the High Court of London.

DWF indicates that BitGo sold these digital tokens before the lock-up period expired, constituting a breach of contract and leading to a significant drop in the token price. DWF is seeking compensation of $114 million, on the grounds that the premature sale by BitGo directly caused the losses.

Reports show that the price of FF fell from 8 cents at the beginning of March when positions were locked in to around 7 cents by the end of April; ESPORTS dropped from around 28 cents in mid-March to 7 cents at the beginning of June.

"The discount obtained by BitGo was conditional upon the tokens remaining locked, yet these tokens were transferred to an exchange about two months before they were first unlocked," DWF stated according to a report by The Financial Times.

"We raised this issue with BitGo in April and May, but in the absence of any commitments, we had no choice but to take legal action."

Private token sales are common in the digital assets industry, where issuers often use them to finance their projects without having to worry about buyers immediately selling the tokens to cash out.

DWF purchased WLFI tokens worth 25 million US dollars last year. WLFI is the native asset of World Liberty Financial, and this crypto project has received support from US President Donald Trump and his family.

This investment once raised concerns among some members of Congress in Washington, who questioned the alleged connections between the founder of DWF, Andrei Grachev, and Russia. Reports indicate that Grachev served as the CEO of Huobi's Russian business from 2018 to 2019. Huobi has been sanctioned in multiple jurisdictions for allegedly assisting Russia in circumventing Western sanctions.

Neither DWF nor BitGo immediately responded to CoinDesk's request for a comment.