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BREAKING: introducing ILOs, or Initial Litigation Offerings: a first of its kind token that will bring a $10B+ institutional asset class to the world of crypto and make it available for open, frictionless trading.
This is incredibly important. Thread
https://www.theblockcrypto.com/post/87491/litigation-financing-investment-token-avalanche
This is incredibly important. Thread
https://www.theblockcrypto.com/post/87491/litigation-financing-investment-token-avalanche
2/ Last month, I teased the creation of a new major asset class coming to Avalanche. There was tons of speculation about what it could be. We can finally announce the advent of ILOs. Before we dig into details, let me make sure everyone understands what litigation finance is.
3/ At its core, litigation finance is simple: suppose Alice (plaintiff) sues Bob (defendant) for damages of up to $250M. However, the lawsuit is expensive and not without risk. So, an investor, Charlie, gives $5M to Alice to pay for her legal costs in return for some percent, ...
4/ ... say 20%, of Alice’s collection after winning against Bob. If Alice settles against Bob for say, $100M, then Charlie is now entitled to 20% of that recovery, or $20M. In this scenario, Charlie earned back 4x of his initial investment.
5/ Litigation funders have been posting record-breaking returns over the past decade, averaging as much as 40% returns / year. However, there are two major pain points in the industry that act as a bottleneck preventing more plaintiffs from securing funds:
6/ First, while there are occasional “quick hits,” litigation financing typically requires a multi-year commitment of capital, which discourages participation from investors who may need liquidity.
7/ Second, access to litigation financing investments have been largely inaccessible to retail investors and mostly reserved to ultra-high net-worth investors and firms.
8/ This is where tokenization changes the game: ILOs tokenize this old fundraising model, with each token representing a claim to a portion of potential litigation recovery.
9/ By tokenizing the claims, ILOs create an active market, where retail investors can trade in and out of positions over the lifecycle of a lawsuit. In essence, ILOs are similar to IPOs.
10/ In the same way that IPOs make private companies into publicly traded ones, ILOs make ligitations instantly accessible to the global markets.
11/ Beyond the investment opportunity, opening these markets to the public will provide greater access to justice for those who might not otherwise be in position to pursue their legal claims.
12/ Thus, the availability of ILOs will mark a major milestone in the use of blockchain technology to democratize financial products that are uncorrelated to the markets and tied to real world outcomes.
13/ While announcing the creation of ILOs, I’m also excited to announce the very first ILO: Apothio LLC v. Kern County et al. The case arises out of one of the largest wholesale destructions of personal property by government entities in the history of the United States.
14/ The Apothio case, once tokenized, represents a critical moment in both crypto and legal history. It can change how litigation financing is done in the U.S. and how crypto is at the forefront of this change.
15/ In late October 2019, without providing any notice or opportunity to be heard, Kern County Sheriff’s Office (“KSCO”) deliberately and wrongfully destroyed 500 acres of Apothio’s legally grown hemp farm, estimated to be worth at least $1 billion.
16/ Apothio has brought suit against Kern County, KCSO, the California Department of Fish and Wildlife and others for damages arising from this wrongful destruction. More on the Apothio case here: https://www.courtlistener.com/recap/gov.uscourts.caed.372076/gov.uscourts.caed.372076.1.0.pdf
17/ We're excited to be working with @JoinRepublic and @kylewroche to bring the first set of ILOs to Avalanche in 2021. The firm representing Apothio, @RCFLLP, is the same firm representing Ira Klarman in the case against Craig Wright. Will the $5B claim against Craig be ILO-ed?
18/ For updates on ILOs and a peek at what's to come, subscribe to news from http://ryval.market/ and make sure to follow @RyvalMarket. As ILO markets take shape, Ryval will be the entity facilitating their launch and the entity to reach out to if you need ILO funding.
19/ Once an ILO is launched on Avalanche, it will become available for trading across platforms that support integrations with Avalanche, including cryptocurrency exchanges.
