Litigation finance is the practice of buying litigation “assets,” which can also be described as a percentage of a court case. This allows investors to help fund lawsuits in order to lend a hand to the plaintiff and share in the award upon judgment. To ensure success, the litigation finance team hires lawyers and deploys their own in-house resources. Liti Capital is the first to tokenize its shares, creating an asset-backed equity token, an uncommon asset class in blockchain and FinTech. Using a token also lowers the bar of entry for a wider range of investors.
Korea IT Times interviewed Jonas Ray, Co-Founder, Managing Director, and Head of Strategy about the entry of litigation finance in the world of crypto and how investors can get involved. He also talks about the merits of his team, their token, and how their company plans to help the crypto community.
First, for those who have never heard of it, what is litigation finance? Tell us a little about that and your company’s background.
On the surface, litigation finance is a form of private equity. It’s an asset class that’s only available to ultra-wealthy investors, and it comes with big returns. But how we see it is a way to fund lawsuits for people that can’t afford them. These are big cases with huge defendants, sometimes entire countries. When these big guys come to court, they come with millions of dollars, and not everyone can match up to that. So when one of these guys makes a big mistake that affects a lot of people they often get away with it because they’re the only ones with the resources to fight.
So that’s where we step in, buy a percentage of the lawsuit in order to help fund the case, and then put our own resources in to secure that judgment, but more importantly, the award. David Kay, our CIO, has extensive experience in litigation finance, basically pioneered the industry, and specializes in identifying the defendant’s assets and enforcing payment. In fact, he’s known for securing one of the largest arbitration awards in history, the largest at the time.
Before Liti Capital, I was the head director at Athena Intelligence, and before that, I worked at the Geneva office of another multinational intelligence agency, which gives me the experience and resources to lead these investigations and help find the right cases. We also have Andy Christen on the team, Head of Operations, and Jaime Delgado, Head of Tech, who both specialize in blockchain and Fintech startups.
You have a strong lineup with an impressive history. With the former successes of your team, what makes you turn to the blockchain? What more do you need?
Like I said before, litigation finance is an asset class that’s only really accessible to the top, top investors. Most people don’t even know it exists. As much as we try to do some good in the world, and we do feel comfortable in our case-selection process, at the end of the day, the ones who profit the most are the people who already have lots of money. We’re happy to secure those judgments for our clients, but really that’s the bare minimum we can do for them.
So the blockchain is the amazing decentralization tool that gets everyone involved, and that’s what we were looking for. Because of the flexibility and the modularity and even the security and simplicity of the token, it allows for anyone with a smartphone and a little know-how to put their hands on real investment tools that only banks and big-money investors could before. We truly believe we have a lot to offer in that sense, an equity token with a big ROI, but this time we won’t be lining the pockets of the rich every time. Not that they can’t invest with us, they can, but now they’re on a level playing field with the rest of the community who deserves those opportunities and is smart enough to make those decisions.
This community and participation, so how exactly can people get involved in your company, and how does blockchain technology enable that, were traditional methods wouldn't?
People can get involved in Liti Capital in multiple ways. First, they can purchase the LITI Token, which means that they purchase a share of Liti Capital SA. These shares give them access to dividends, which is a share of the profit of the company, and to voting rights, which allows them to vote and participate actively in the yearly general assembly meeting. People can also get involved with the wLITI, which is the wrapped version of the LITI Token, and that will be tradable on Uniswap.
The wLITI does not give rights to dividends or to voting rights but is the fully tradable version of the LITI Token, which allows people to support us and to speculate on our success. Additionally, people can get involved in two other major ways.
The first is that we have committed between 5 and 10% of our investment budget to investigate and litigate crypto scams. If any member of our community, LITI or wLITI holders, have been the victims of a crypto scam, they can suggest to us which company we should investigate and litigate against. If we receive multiple suggestions, users can pool their wLITI into each suggestion and the suggestion with the biggest pool gets chosen by Liti Capital for its investigation and litigation.
People can also receive wLITI and LITI by claiming bounties. If they recommend us a case we decide to take on or relevant information about some of the people we are litigating against, they will receive bounties for their participation.
None of the traditional investment methods allow people to be involved in such a precise way as far as a litigation finance company is concerned. Traditionally, big-money investors could invest in a litigation finance company by committing large sums of money. We are democratizing this asset class by letting people invest for as little as a tenth of a Swiss Franc, which will be the listing price of the wLITI.
You mentioned two different tokens. Briefly describe the difference between the two and why both are needed.
LITI token corresponds to the share of the company. One LITI is equal to one share. This gives rights to dividends and voting rights. Users have to pass a brief KYC where we identify them and they can then get onboarded.
wLITI is the tradable instrument of the LITI Token. No KYC required, fully decentralized on Uniswap, and wLITI token holders can swap five thousand wLITI for one LITI on the Liti Capital website with the same KYC requirements as before. With both these tokens, we allow for short-term holders and long-term holders to find the participation they want in the success of Liti Capital SA. The wLITI brings liquidity in a very illiquid industry where money is locked in funds for several years. This is not the case anymore with our solutions at Liti Capital.
This is rather unconventional, even in the crypto space. How do you see yourselves positioned in the community? What gap are you filling?
Real equity tokens are rare. Asset-backed equity tokens are even rarer. We bring a real-life use-case to the blockchain and to DeFI, not just ideas and possible utility.
We have already three assets, or cases, in our portfolio and we plan to grow this rather quickly with the additional capital we hope to raise. We plan to show to all the blockchain skeptics that yes, blockchain will revolutionize private equity, and we are the best example of it. We’re going to show investors that it’s possible to invest in a high return, very lucrative asset class with minimal funds.
Additionally, the blockchain and crypto scene has been riddled with too many spammers. Victims of those scams don’t really know what to do and this gives a bad rap to the entire community. We will do something about that by bringing our litigation and investigation expertise and skillset to help victims of crypto scammers and clean up the community of those bad actors.
The crypto community needs someone like you watching their back, but why should the community put their faith in your team? What tools does Liti Capital have that others don’t?
We are the first one to bring private equity to the blockchain, with real-life assets. We bring in a large amount of experience, in the blockchain first, but also in the management of those real-life assets. Members of our executive team have been conducting and executing very successful strategies on litigation finance and litigation for more than a decade. Our executive team has also more than a decade conducting complex investigations and identifying hidden assets, which helps tremendously in the enforcement part of the litigation that we finance and participate in. The combination of our blockchain expertise, Fintech, innovation of developing new machine learning and AI algorithms for effective case selection, and our litigation and investigation skills is what sets us apart from a lot of teams out there.
Where do you see yourselves in five, ten years? How do you plan to grow and evolve?
After taking down a few scammers and showing the crypto community that we’re serious about what we do, we hope to be a sort of neighborhood watch for crypto. We’re hoping these people think twice about defrauding regular investors, regular people who are putting their livelihoods on the line, people trying to do something with their lives. These scammers are holding down the entire community, and it’s slowing down innovation and progress. They’re scaring potential investors away, and if someone does get scammed, they might not come back to cryptocurrency for years, if ever.
There is a popular story about wolves being let loose in a nature preserve where there were no predators. Only a few wolves were released in miles-wide preserve. What the researchers couldn’t figure out was why the ecosystem was failing. Without and predators, it should be teeming with life, right? But the elk were eating all the vegetation, which was slowly killing the forest.
The problem was, there was no regulation, no checks and balances. When the wolves came, the elk started retreating into the background before they were even attacked. All the wolves had to do was howl at night. Just like that, the ecosystem started to recover.
Right now, the scammers are like the elk, roaming freely and taking as much as they like. Well, we’re the wolves. In a couple of years, you’re going to see these scammers retreating into the background, and it’s going to allow the community to grow and thrive.
