The crypto bros are at it again, folks — and this time, they’re trying to help the rich make money off other people’s lawsuits.
As Vice reports, the Ryvval startup is “disrupting” the world of litigation funding to gamify the US court system in a manner that will, at least nominally, benefit litigants as well as investors.
First, some background on litigation funding. Half-gambling and half-fundraising, the process of litigation funding is a way for people with money to help those without fund their lawsuits — and in return, they get a share of whatever potential settlements the claimants receive.
A booming industry, litigation funding has had its own crypto “disruptors” over the past year via Initial Litigation Offerings (ILOs), which take the concept and crypto-fy it by allowing retail investors to find and fund cases on the blockchain.
Launched in late 2020 on the Avalanche blockchain, the first ILO allows investors to buy “litigation tokens” in the case of Apothio, LLC, a California cannabis grower that’s suing its county for destroying 500 acres of crops. The case has been stalled since the beginning of 2021, but that hasn’t stopped investors from putting more than $330,000 into the case, which is well above its $250,000 fundraising goal.
Now Vice reports that Ryvval, which was co-founded by lawyer Kyle Roche, builds off the ILO concept — which Roche helped create — by creating a platform that allows individuals to invest in ILO court cases.
While Roche told Vice that “Ryval’s goal is to make access to justice more affordable” and that he wants “make the federal court system more accessible for all,” the startup’s website — which is still in “subscribe for more info” mode — sings a different tune, geared far more towards the people who want to profit from these cases.
The site boasts that investors will be able to “access a multi-billion dollar investment class previously unavailable to the public,” though as Roche told Insider, only “accredited investors” (eg, rich people, businesses, and other entities the Securities and Exchange Commission deems eligible for regulatory exemption) will be able to trade immediately, while the less prestigious will be subject to a yearlong freeze on their accounts.
Notably, the Ryval platform doesn’t actually exist yet, but its co-founder hopes to have it up and running by the end of the first quarter. So far, it appears that Apothio is the only ILO being publicly traded, but Roche hopes to have between five and ten more by the time the platform gets built out and launched.
When you shave away the financial speak and legalese, the concept of ILOs is intriguing. The prospect of good Samaritans helping those without access to the amount of capital it takes to sue companies or governments is exciting, and the idea of aligning incentives between the needy and the rich is catnip to capitalists — but, at the same time, the propensity for corruption seems particularly high given that both crypto and crowdfunding are already mired with scammers.
Whether Ryval and its inevitable imitators will do any good or just become another blip in the lightning-speed radar of crypto world remains to be seen.
READ MORE: Tech Startup Wants To Gamify Suing People Using Crypto Tokens [Vice]
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