That`s exactly what Trial Tokens are: access and inclusion in lawsuits. And they offer it one case at a time with their advanced online litigation funding platform that leverages Ethereum`s blockchain and smart contract technology. * Editor`s Note: If you want to dive deeper into blockchain platforms and smart contracts, we recommend reading our guide to Ethereum and smart contracts. As blockchain technology enables innovation in entertainment, gaming, financial services, healthcare, real estate, etc., we have assembled an interdisciplinary team that includes lawyers who understand these industries as well as the corresponding applicability of blockchain technology in these areas. Our team includes leading companies in the areas of NFT licensing and transactions, privacy, cybersecurity, intellectual property, venture capital, tax, finance and international trade that can master the complexities of blockchain technology and digital assets and take advantage of opportunities for innovative use and monetization of these technologies. Roche Freedman and Republic have already introduced the CONCEPT OF THE ILO into a real legal dispute. The lawsuit pits Apothio LLC, a hemp and cannabis company, against Kern County, California, following the county`s alleged destruction of aphotio`s $1 billion crop. Roche Freedman represents Apothio, and Roche Freedman and Republic have released $5 million to the ILO on Republic`s platform. Ryval appears to be the next step in the collaboration between Roche Freedman and Republic, creating a standalone platform for crowdsourcing and symbolic litigation funding for future litigation. In theory, the tokenization process associated with an ILO should allow investors to harness the benefits of the technology to maximize returns.
A first advantage would be the transparency of all smart contract transactions and processes on the blockchain. This verifiability would ensure that the financing fee structures themselves are investment-oriented. A second benefit would be automation and flexibility: allowing investors to offer integrated options based on different case outcomes (e.g. Partial repayments in case of early termination) and self-executable payments to investors in case of successful takeover, bypassing payment risks in traditional financing. A third advantage would be liquidity: since crypto structures easily allow the creation of markets to buy and sell tokens, market makers can very quickly create large pools of liquidity. This, in turn, would allow token holders to enter or leave a litigation fund very quickly, with reduced risk and depreciation (e.g., the ability to sell shares to another bidder at any point in the process) and potentially hedge the risk by buying or selling derivatives for the value of interest. By far, litigation funding and venture capital seem surprisingly familiar – both are essentially an arms race to combat a variety of forces where the likelihood of success but returns tend to be oversized. A booming industry, litigation funding had its own crypto “disruptors” last year via Initial Litigation Offerings (ILO) that embrace the concept and crypto-fy by allowing retail investors to find and fund cases on the blockchain. Just as special purpose acquisition companies (PSPC) have significantly replaced traditional initial public offerings (IPOs), in the future, THE ILO could undermine traditional litigation financing through a massive influx of capital from small investors. However, like PSCS, ILO has good and bad characteristics. $LITI token holders enjoy the same level of protection as traditional shareholders under Swiss law and, as such, have access to legal mechanisms to enforce their claims. Plaintiffs who use legal services acquire trial tokens (TT) based on the ERC-20 standard.
From there, they create a complete file of trial funds that funders can access and consult. While Ryval`s offering can be heavily criticized due to the terms of its funding agreement, tokenizing litigation funding as a concept and innovation raises a number of intriguing opportunities. Future efforts will make it possible to better exploit the full potential of tokenization applied to litigation financing. Below are some of the possibilities of cryptographic technology: Trial Token facilitates trust by connecting parties seeking funding for their claims with supporters who might be interested in their case and providing assistance in financing litigation. More money for more cases: PSPC can provide funding to fewer traditional businesses. ILO can extend funding to less traditional costumes. It can be good or bad. The criticism of Ryval`s approach was not wasteful, based on reading the ILO`s Investment Finance Treaty Apothio (and the annexes here and here). Commentators have pointed to the ILO`s highly problematic and one-sided conditions in relation to current market conditions in the area of litigation financing.
This includes the weak position of unaccredited investors in terms of prioritizing investment returns: in the ILO`s investment return cascade, lawyers are paid before investors, which is not a common market practice in financing litigation. ILO conditions set the maximum recovery for investors at 3.5 times the initial investment (after a 3-year lock-up period), which in turn is lower than the market conditions that current litigation financiers negotiate for themselves. Finally, the ILO`s conditions include a largely indefinite procedure for investors to obtain notification of a successful reorganization and to demand a return on that recovery. This last criticism is particularly noteworthy because the ILO does not realize a great potential benefit of the above tokenization – automation and self-executing payments in the event of a successful recovery. IOTs are similar to initial coin offerings (ICOs), but instead of raising money for a new coin, app, or service, they are used to fund certain disputes. Think of micro-investments for lawsuits. In an ILO, investors receive tokens that entitle them to potential recovery shares, an economic right that has been converted into a digital asset. When cases fail, they lose their investments. Ava Labs says it is “working on regulatory processes to enable the primary issuance and secondary trading of tokens minted on the Avalanche blockchain,” which are likely to fluctuate in value with process prospects. Ryval`s concept is to create a market for crypto tokens that represent stocks in a dispute, while granting unaccredited individual investors access to litigation financing as an asset class. The cryptographic tokens created (using the Avalanche blockchain) represent tokenized shares of a funded debt, and this cryptographic economic structure for tokenization/capital raising has been called the ILO. The first ILO, launched on the Avalanche blockchain in late 2020, allows investors to buy “process tokens” in the case of Apothio, LLC, a Californian cannabis grower suing his county for destroying 500 acres of harvest.