The White Dragon Defies FATE?

[Criosphinx]

...Yeah...but then Serge became  the arbiter and Fate could not rech the flame ....yeah.... things might make some sense now.... but i still think they were sealed (when we say sealed we say their powers xD)....and i think they knew they were sealed by Fate.... 'cuz the water dragon says : "FATE has fallen... Fate has died..." when you defeat Fate...

[Legend of the Past]

They knew, they were the TD's way of communicating with the timeline. Still, they WERE sealed, although they were projections. Thus, when FATE died, they can take their true, powerful form, and wreck havoc in Lavos' name.