(Photo credit: Ryval / Roche Freedman LLP)
A tech startup plans to become “the litigation finance stock market” by allowing ordinary Americans to gamble in civil lawsuits through the purchase (and exchange) of associated crypto tokens. By doing so, the company hopes to provide financing to people who might not otherwise be able to file claims.
“Ryval’s goal is to make access to justice more affordable,” said Kyle Roche, a trial attorney and one of the startup’s founders. “What I want to do is make the federal judicial system more accessible to everyone.”
Roche believes that the US federal court system is one of the best in the world, but that navigating it is prohibitively expensive for the average American. As a result, he believes, potential whistleblowers are often hesitant to challenge corporations and other entities with “good resources” due to the potential cost of legal action. Through Ryval, Roche wants to “make lawsuits happen that may not have happened.”
However, on its website, Ryval focuses all its attention on the potential return for investors. “Buy and sell tokens representing stocks in litigation and access a multi-million dollar investment class that was previously unavailable to the public,” the company states. Ryval also promises a “50% higher annual return,” although Roche admitted that the figure “may be a bit high” when asked by Motherboard about it.
“What we do is: tell the story, examine the legal claim, and then allow the public to invest and give you the funds to go litigate your case,” Roche explained. “And what does the public get in return? The public is interested in the outcome of their lawsuit. “
The way it works is a bit like a crypto-infused, lawsuit-focused GoFundMe, if the crowd could benefit from your investment. The company takes advantage of a rule created through former President Barack Obama’s JOBS Act, which allowed a private company to collectively finance up to $ 5 million Americansregardless of your wealth. Using the Avalanche blockchain, Ryval will allow “all investors regardless of accreditation status”To buy tokens associated with a specific case and then retain or exchange them on the open market. Whoever owns the token at the time of an agreement or verdict, then gets paid.
The team has called the token sale an “initial litigation offer,” and Roche has compared Ryval to Robinhood, but by law. (A word of warning: while he is rich and sophisticated “accredited investors“You will be able to exchange demand tokens immediately, the non-rich will be legally bound to accept a one year lockout period, according to Insider.)
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The concept of litigation financing it is not unique. An industry built around the concept has been gaining popularity in recent years. Between June 2019 and June 2020, investors sold $ 2.5 billion in the litigation finance industry, according to financial advisory firm Westfleet Advisors.
But until now, only so-called “accredited” wealthy investors could put their money into the sector. By using crypto tokens, Ryval claims, you can legally open access to the industry for everyone.
Tokenization of US law will benefit users in other ways, including by providing the market with liquidity that was previously unavailable in litigation financing, Roche claims. If someone with a token needs money or thinks a case is headed south, they can sell their token to the highest bidder and withdraw it. Such marketability will also allow the value of a token to rise or fall as the case unfolds. Let’s say the plaintiff gets a big court ruling, not a victory, but a big ruling. The price can go up, ”he said.
Roche’s law firm Roche Freedman has been working with the fintech company Republic and the smart contacts platform Ava Labs, which created the Avalanche blockchain and whose motto is “Digitize all assets in the world, ”To develop the Ryval. Although still in the early stages, Roche expects a full team to be announced in the first quarter of the year.
The ILO already has a test case in Apothio, a hemp grower whom Roche began representing after the Sheriff’s Department in Kern County, California, illegally destroyed 500 acres of a farm field, according to the lawsuit. “The destruction of that crop was catastrophic for his business,” Roche said. “I had presented him with the idea of the ILO [Apothio’s CEO], and he liked it as a way to get some visibility into what had happened to him and his case, and also to raise funds to help him rebuild his business. “The ILO, which was registered with the SEC and required an investment $ 100 minimum, subsequently raised almost $ 350,000. (Roche clarified that its law firm will not participate in most of the lawsuits examined by Ryval and that it views it more as a national platform for other law firms and clients.)
But it wasn’t until after the launch of the initial OIT Apothio that Roche realized the potential of the platform. That happened in January last year, when online trading platform Robinhood temporarily suspended trading of GameStop shares after a massive wave of interest related to memes. The decision led some to accuse the trading platform of illegal manipulation. “There was an explosion of ‘When can we Robinhood of the ILO? We want to hold Robinhood accountable, ‘”Roche said.
Roche understands that messaging will be “very important” at first, so for the first few years, Ryval will be “focused on access to justice and taking on claims that we think are good claims,” he said. “But at the end of the day, I don’t think anyone should be the gatekeeper for who has access to the courts. I believe that access to the judicial 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’s lawsuits will “run the gamut” and include antitrust, securities claims and wrongful termination.
When asked if there were any types of cases that Ryval would avoid, Roche replied, “I don’t see anything that I wouldn’t categorically approach.”
To help newbies navigate such a complex industry and decide where to place their bets, Ryval will provide users with the basic facts of the case and procedural elements necessary to win, as well as other relevant information such as how often to win. performs a particular type of case is successful. “One of the real responsibilities we have in building this platform is educating the market,” said Roche.
But Roche said that retail investors can gain more than they can lose by entering the legal market. “These investments have been very lucrative over the past five to 10 years,” Roche said, adding that some of the top law firms average an “astronomical” annual percentage rate of 30 to 40 percent. He expects interest to be especially high in the event of a recession, as litigation outcomes are largely “market independent,” giving people an alternative form of investment.
While Roche expects many people to invest in cases that focus exclusively on the potential return on investment, it hopes that there will also be a “pro bono element” to Ryval, in which people raise legal funds “for those in need.” without so much concern for your personal finances.
You are not particularly concerned about the possibility that your company will create an explosion of frivolous lawsuits in a country famous in litigation, not only because they plan to examine the claims, but because of the fact that Ryval will have a comment page where people can voice their opinion. your concerns.
“Putting the idea and the demand out there serves as a good trigger function,” Roche said, adding elsewhere: “I think access to capital creates a better justice system.”