Avalanche tokenises litigation-financing market worth $10 billion

On the Avalanche blockchain, led by veteran Bitcoin industry figure Emin Gün Sirer, a new funding vehicle called the Initial Litigation Offering (ILO) will be launched. The new form of financing envisions paying litigation costs in exchange for a share of any payouts if the case is won.

The ForkLog press release states that the ILOs will give retail investors access to a $10 billion market. The initiative is being developed by Roche Cyrulnik Freedman, the law firm affiliated with Sirer’s Ava Labs, and the tokenization-focused consulting firm Republic Advisory Services.

The first ILO will raise funds to file a suit by Apothio LLC, based in California. The company contested the destruction by the Kern County Sheriff in October 2019 of 500 acres of cannabis crops with an estimated value of $1 billion. Law-enforcement officials did not notify them of their actions and did not provide an opportunity to appeal.

“The growth of litigation funding has provided individuals and small organisations with access to the resources needed to defend their legal rights against well-funded organisations. The emergence of the ILO could potentially provide even greater access to justice in our society,” said Kyle Roche of Roche Cyrulnik Freedman.

Ava Labs spokesperson Kevin Sekniqi sees a similarity between the ILO and an IPO.

“By tokenising claims, the ILO creates an active market where retail investors can trade positions and exit them throughout the life cycle of a suit. Essentially, the ILOs are like IPOs. Just as IPOs turn private companies into public ones, ILOs make litigation instantly accessible to global markets,” he explained.

10/ In the same way that IPOs make private companies into publicly traded ones, ILOs make ligitations instantly accessible to the global markets.

— Kevin Sekniqi (@kevinsekniqi) December 14, 2020

19/ Once an ILO is launched on Avalanche, it will become available for trading across platforms that support integrations with Avalanche, including cryptocurrency exchanges.

— Kevin Sekniqi (@kevinsekniqi/status/1338510603867070464?ref_src=twsrc%5Etfw) December 14, 2020

ILO does not guarantee payouts and depends on the outcome of the litigation. If it is lost, investors lose their funds; if they win, they share in the success.

CNBC cites data from LexShares, a litigation-financing fund that has invested in 103 cases since 2014. Of these, 43 were resolved in its favour with a win rate of 70%, another 60 are still under consideration. According to the fund, the median annual return on settled cases after fees stood at 52%. The figure was almost six times the S&P 500’s average annual return over that period.

The Avalanche mainnet launch took place in late September. The project’s creators estimate network throughput at 4500 TPS, with finality of transactions achieved “in fractions of a second.”

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