Tech Startup Wants To Gamify Suing People Using Crypto Tokens (vice.com) 51
An anonymous reader quotes a report from Motherboard, written by Maxwell Strachan: A new tech startup plans to become "the stock market of litigation financing" by allowing everyday Americans to bet on civil lawsuits through the purchase (and trade) of associated crypto tokens. In doing so, the company hopes to provide funding to individuals who would otherwise not be able to pursue claims. "Ryval's goal is to make access to justice more affordable," said Kyle Roche, a trial lawyer and one of the startup's founders. "What I want to do is make the federal court system more accessible for all." [...] The way it works is a little like a crypto-infused and lawsuit-focused GoFundMe, if the crowd stood to profit from their investment. The company takes advantage of a rule created through former President Barack Obama's JOBS Act, which allowed a private company to crowdfund up to $5 million from Americans, regardless of their wealth. Using the Avalanche blockchain, Ryval will allow "all investors regardless of accreditation status" to purchase tokens associated with a specific case and then hold or trade them on the open market. Whoever owns the token at the time of a settlement or verdict then cashes in. The team has dubbed the sale of tokens an "initial litigation offering," and Roche has compared Ryval to Robinhood, but for the law. (A caveat: While wealthy and sophisticated "accredited investors" will be able to trade lawsuit tokens immediately, the non-rich will be legally required to agree to a year-long lockup period, according to Insider.)
The concept of litigation funding isn't unique. An industry built around the concept has been growing in popularity in recent years. Between June 2019 and June 2020, investors plowed $2.5 billion into the litigation funding sector, according to the finance advisory firm Westfleet Advisors. But up until now, only so-called "accredited" wealthy investors could put their money into the sector. Through the use of crypto tokens, Ryval claims, it can legally open up access to the industry to all. The tokenization of U.S. law will benefit users in a few other ways, including by providing the market with liquidity that previously wasn't available in litigation funding, Roche claims. If someone with a token needs money or believes a case is heading south, they can sell their token to the highest bidder and cash out. Such tradeability will also allow the value of a token to rise or fall as the case develops. "Let's say, the plaintiff gets a big ruling from the court -- not a win, but a big ruling. The price may go up," he said. Roche's law firm, Roche Freedman, has been working with the financial technology company Republic and smart contacts platform Ava Labs, which created the Avalanche blockchain and whose tagline is "Digitize All The World's Assets," to develop the Ryval. While still in the early going, Roche expects a full team will be announced in the first quarter of the year. [...]
Roche understands that messaging will be "very important" in the early going, which is why for the first few years, Ryval will be "focused on access to justice and taking on claims that we believe are good claims," he said. "But at the end of the day, I don't think anybody should be the gatekeeper to who has access to the courts. I think access to the court system, access to the legal justice system should be something that is given to as many people as the justice system can handle." Roche believes Ryval lawsuits will "run the full gamut" and include antitrust, securities claims, and wrongful termination. Asked if there were any types of cases Ryval would avoid, Roche replied, "I don't see anything that I wouldn't categorically not go near." To help novices navigate such a complex industry and decide where to place their bets, Ryval will provide users with the basic facts of the case and the procedural elements necessary in order to win, as well as other relevant information like how often a particular type of case is successful. "One of the real responsibilities we have in building this platform is to educate the market," Roche said. But Roche said retail investors stand to gain more than they stand to lose by entering the legal market. "These investments have been very lucrative over the course of the last five to 10 years," Roche said, adding that some top law firms average an "astronomical" annual percentage rate of 30-to-40 percent. He expects interest will be especially high in the event of a downturn, since litigation outcomes are largely "market agnostic," providing people with an alternative form of investment.
The concept of litigation funding isn't unique. An industry built around the concept has been growing in popularity in recent years. Between June 2019 and June 2020, investors plowed $2.5 billion into the litigation funding sector, according to the finance advisory firm Westfleet Advisors. But up until now, only so-called "accredited" wealthy investors could put their money into the sector. Through the use of crypto tokens, Ryval claims, it can legally open up access to the industry to all. The tokenization of U.S. law will benefit users in a few other ways, including by providing the market with liquidity that previously wasn't available in litigation funding, Roche claims. If someone with a token needs money or believes a case is heading south, they can sell their token to the highest bidder and cash out. Such tradeability will also allow the value of a token to rise or fall as the case develops. "Let's say, the plaintiff gets a big ruling from the court -- not a win, but a big ruling. The price may go up," he said. Roche's law firm, Roche Freedman, has been working with the financial technology company Republic and smart contacts platform Ava Labs, which created the Avalanche blockchain and whose tagline is "Digitize All The World's Assets," to develop the Ryval. While still in the early going, Roche expects a full team will be announced in the first quarter of the year. [...]
Roche understands that messaging will be "very important" in the early going, which is why for the first few years, Ryval will be "focused on access to justice and taking on claims that we believe are good claims," he said. "But at the end of the day, I don't think anybody should be the gatekeeper to who has access to the courts. I think access to the court system, access to the legal justice system should be something that is given to as many people as the justice system can handle." Roche believes Ryval lawsuits will "run the full gamut" and include antitrust, securities claims, and wrongful termination. Asked if there were any types of cases Ryval would avoid, Roche replied, "I don't see anything that I wouldn't categorically not go near." To help novices navigate such a complex industry and decide where to place their bets, Ryval will provide users with the basic facts of the case and the procedural elements necessary in order to win, as well as other relevant information like how often a particular type of case is successful. "One of the real responsibilities we have in building this platform is to educate the market," Roche said. But Roche said retail investors stand to gain more than they stand to lose by entering the legal market. "These investments have been very lucrative over the course of the last five to 10 years," Roche said, adding that some top law firms average an "astronomical" annual percentage rate of 30-to-40 percent. He expects interest will be especially high in the event of a downturn, since litigation outcomes are largely "market agnostic," providing people with an alternative form of investment.
Crypto ban in ....? (Score:2)
Crypto ban in ....?
Re: (Score:2)
At least this way there is actually something real backing the crypto token. That alone makes this a better use of the tech than otherwise unbacked cryptocurrencies.
And it IS a tragic miscarriage of justice when someone wronged can't sue because they are too poor to afford the litigation costs. If this actually succeeds at addressing that problem for a sizeable number of people, then it would be a good thing.
I suppose wealthy businesses that don't want to venture their own capital on risky lawsuits might
Re: Crypto ban in ....? (Score:3)
If this actually succeeds at addressing that problem for a sizeable number of people, then it would be a good thing Courts, and the legal system in whole, are a finite resource. Where are all of these extra cases going to be heard? And when? The case system is already choking at every level. There's a reason pursuing legal action is expensive. This will only make it more expensive and more out of reach.
Re: Crypto ban in ....? (Score:1)
Re: Crypto ban in ....? (Score:2)
Of all evil things... (Score:5, Insightful)
Putting some sweet words to cover a mechanism to bet on people's destruction.
This is Hunger Games Central District style evil.
Life imitating art (Score:3)
Re: (Score:2)
"Majority Rule" was impressive. The problem is that things like civil rights, respect for other human beings, etc. are always somewhat subtle. Hence there are people, and apparently not few of them, that mistakenly think they can be decent human beings without respecting the rights of others outside of their in-group. Kind of like fascism works.
No not even close (Score:2)
Re: (Score:2)
Indeed. This is obviously driven by some complete psychopaths. The sad thing is that this is even possible.
or I can bet at legal licensed casino or bookie! (Score:2)
or I can bet at legal licensed casino or bookie!
Re: or I can bet at legal licensed casino or booki (Score:1)
Or go to a nearby horse racing spot.
Or to a fight.
Or in Wall Street.
Everything is a game if you can convince enough players there is easy money on the table.
Proxy lawsuits. (Score:3)
This seems like a surefire way to enable corporations to fund proxy lawsuits against any perceived enemy.
So I can withhold evidence as a witness (Score:2)
until the moment it becomes most lucrative for me?
I will call it... (Score:3)
I will call it "ShysterCoin"
Such a terrible idea. (Score:5, Insightful)
If there ever exists a short selling market for these tokens, this will enable someone to sue someone else on frivolous charges, short the options, and collect money regardless of whether they win or lose. The defendant, OTOH, must pay the cost of the his own lawyers.
The natural consequence of such a system is that the wealthy will be able to print money using the court system, while bankrupting the poor through legal fees. The wealthy win, the lawyers win, and the unlucky or unpopular end up financially ruined.
Re: Too big to fail MSM... (Score:2)
Kyle Rittenhouse if he is suing for defamation against any MSM that defamed him as well Kylie Rottenhouse is a white supremacist and double murderer. He got away with murder after being tried in front of a racist, conservative judge. He should be in jail for hate crimes as well as homicide. He went out in public with the intention of confronting and murdering protesters. He is a horrible person who should never be employed or associated with or by anyone. How did I do? Has /. now published defamatory con
Re: Too big to fail MSM... (Score:2)
Re: (Score:2)
> He is a horrible person who should never be employed or associated with or by anyone. How did I do? Has /. now published defamatory content also?
Now do Juicy Smollet.
Uuuhh... (Score:3)
"Ryval's goal is to make access to justice more affordable,"
How about fixing that problem, instead of creating an abusive "workaround" for it?
Re: (Score:2)
My opinion (Score:1)
I thought this already existed (Score:2)
What if the judge holds tokens? (Score:2)
Re: (Score:2)
Yes, the conflict of interest provisions. Judges have been fired/disbarred for conflicts of interest, but things like this do happen from time to time.
I'm not sure what happened in the PA case where the judge was an investor in a private prison firm, but he's not a judge anymore. He might even have gone to jail.
That headline was made by an algorithm ! (Score:1)
You can't fool us anymore.
wants to using
a = Tech Startup / Jeff Bezos / China
x = Gamify / Disrupt / Prevent
y = Suing People / The SuperBowl / The Republican Party
z = Crypto Tokens / Web3 / GMOs
Cracked it !
Re: (Score:1)
Should be:
(a) wants to (x) (y) using (z)
a = Tech Startup / Jeff Bezos / China
x = Gamify / Disrupt / Prevent
y = Suing People / The SuperBowl / The Republican Party
z = Crypto Tokens / Web3 / GMOs
Cracked it !
Pay-on-verdict is risky (Score:2)
It's risky to pay on verdict, because of appeals and defendants declaring bankruptcy. Best to pay when the cheque clears.
A friend of mine once ran a litigation finance fund. He said the biggest problem wasn't figuring out who was likely to win - it was figuring out if the defendant could afford to pay.
Re: (Score:2)
This, right here. Prepare to rarely, if ever, get a pay out.
So Like Worse Than Classic Litigation Investment (Score:3)
Litigation funding isn't per se evil. It has pluses and minuses (on the one hand it allows people who have been hurt who otherwise couldn't afford to litigate and, on the other, it can turn exploiting unfair aspects of the law into a numbers game). But, for these reasons litigation funding is pretty heavily regulated. So bringing it together with the existing regulatory uncertainties of crypto based securities seems like business disaster.
More generally, the people who should be investing in litigation funding are those who have some knowledge or expertise that lets them evaluate the likelihood of success (or only invest very indirectly by lending money or, in countries that allow non-lawyers to have an interest, purchasing shares in law firms). And litigation funding isn't the kind of thing you can get away with doing illicitly and hoping no one notices so there is literally no benefit to the product being offered.
It's just adding all the problems of crypto based investment to the regulatory and informational problems of litigation funding to no one's benefit.
Re:So Like Worse Than Classic Litigation Investmen (Score:4, Interesting)
There're existing ways to crowdfund legal actions. Websites like GoFundMe already facilitate this and do a better job of it. People are free to contribute to whatever causes they want. Here's one example [gofundme.com] that showed up when I searched for "legal" and there are plenty of others.
I don't see what crypto brings to the table at all in this regard other than perhaps being able to fund causes that any of the various websites wouldn't permit on their site for whatever reason. The summary talks about being able to trade tokens and how various different motions, etc. during the course of a case could affect the price of those tokens. Ignoring that anyone with enough skin the game would try to affect the outcome for purely financial reasons, this seems to have no reason to exist.
One of the most evil things I've ever heard of (Score:4, Insightful)
Seriously, this is one of the most evil, horrible, prone-to-corruption things I've ever heard of.
Just think for 30 seconds about the perverse incentives this will generate, and of all the horrible travesties of justice that could (WILL) occur if this goes live.
For example, you have a 100% slam-dunk case, but some fucktard somewhere has bet against you, and does everything in their power to sink your case....just so they can earn a few bucks. Or maybe millions of bucks.
Whoever thought this up needs a bullet in their brain.
Legal Loophole? (Score:2)
I mean of all the places where it's a horrible idea to rely on an apparent loophole in the laws regarding investment the very last place you would want to do this is litigation funding.
Lawyers are generally a pretty conservative bunch and I doubt they are going to be eager to accept funding that's *maybe* legal (and risk breaching their ethical obligations) because someone didn't extend the rules regarding traditional securities to crypto based securities. No, they'll wait until there's clear guidance from
Smells like (Score:1)
Re: (Score:2)
My name is intellectual property and may not be used without licensing approval.
If used it without approval, and you forgive me, how much would the resulting RemedyCoin be worth?
Champerty (Score:2)
There goes the neighborhood (Score:3)
This is not going to do that. Look no further than this quote to realize why:
Roche has compared Ryval to Robinhood
This idea may, as a side effect, occasionally fund the odd deserving lawsuit here and there that would not have been possible but for its existence. The reality is that the lion's share of what this will fund will be terrible things, because no one looking to profit from it is going to be dumping money into meaningful causes. What they *will* be doing is pouring money into the war chests of those just looking to shift the risk of litigation if the price is right. This will allow patent trolls to raise far more capital than they've ever previously dreamed possible. Corporations will use this to offset their litigation departments, giving us even more complex litigation than we currently have. Also, thanks to the combination of an internet full of trolls and the ability to spread small costs across a large number of people, it will allow for an explosion of the lawsuit equivalent of griefing, since it will work to shield those filing the odd frivolous suit from the financial consequences they would otherwise face.
This will not "make the federal court system more accessible" to anyone who actually needs it. If anything, this is going to generate so much new pointless litigation that it will make it far less accessible by further congesting it.
Even if Ryval manages to avoid allowing their system to sink into this quagmire (and they won't), someone else will fill that void when they do so. This idea needs to be killed off before it gets too big to reign in, like everything else these days that starts with 'crypto'. This is one area where the adults in the room need to step up and say no to the whole "move fast and break things" mentality before the thing we 'break' is our societal structure.
Nip this thing in the bud (Score:2)
The only words that come to mind are âoeperversion of justice.â
Outcome of a legal case should not provide a financial interest for otherwise uninterested third parties.
This is akin to putting people in arenas and having them fight to death while the rich bet on the outcome.
Yet more crypto snakeoil !!! (Score:2)
Combining 3 things for no good reason. (Score:2)
1) Litigation Funding.
2) Open Online Market
3) Crypto.
It is totally reasonable to combine an Open Online Market with litigation Funding. Just set up a web site where people that need funding for their litigation can list their cases and let people invest in it.
We have similar open online markets for things like loans. (Lending Club) for example.
But there is NO good reason to force people participating in the online market to use Crypto to invest, let alone a specific crypto tied to that case.
It is an added