Litigation financing has been one of the few areas where financial professionals kept the turf to themselves. However, the emergence of cryptocurrencies and their allied technologies has changed the paradigm.
Liti Capital, one of the new promising kids on the cryptocurrency block has created the $LITI and $wLITI versions of tokens to enter the litigation finance space.
They recently listed the $wLITI token on Changelly PRO.
We reached out to Jonas Rey, the CEO of Liti Capital for more information about this and more.
Here is what he had to say.
Jonas Rey, CEO at Liti Capital
Congratulations on your Changelly PRO listing! What’s next for Liti Capital?
Regarding our wrapped $wLITI token, we’re aiming to list on as many high-profile CEXes and DEXes as possible.
We should have another listing announcement coming soon.
On the litigation funding side of business, we’re currently financing arbitration against Binance, to help over 700 people who suffered more than USD 100 million in damages as a result of Binance’s May 19 outage.
We’re also always hard at work searching for other great cases to add to our litigation asset profile.
What is the general concept behind the $LITI token?
$LITI is Liti Capital’s equity token — it’s a blockchain-secured share of our company that entitles holders to a percentage of profits we earn from court awards.
We have a highly experienced investment team with a track record of securing winning litigation assets.
Please, can you tell us more about the $wLIti token?
Our $wLITI wrapped token can be traded on exchanges but does not give holders rights to dividend payments.
$wLITI can be exchanged for $LITI tokens on a 5000:1 basis.
How can litigation be valued?
Litigation finance is a highly valuable assets.
Litigations are calculated around the amount of damages that can be associated with the claim.
These damages can often run in the hundreds of millions of USD.
What are the mechanisms of risk mitigation in valuing legal cases?
Before we take on a case, we conduct a legal due diligence to assess the merit of the case.
If the case makes sense and we are confident we can win it, we then conduct a financial due diligence on the counterparty.
This is key as winning a judgement is important, but being able to get paid is crucial.
Ensuring our counterparty has liquid assets is what allows us to select solid good paying cases.
What measures are put in place in case of legal cases that are lost despite being tipped, studied, and analyzed to win?
It is inevitable that a case will be lost.
No one has a 100% success rate. Which is why we are pooling our cases in the portfolio in the holding company.
That way, investors have exposure to all cases and even if one is lost, the winnings of the other cases largely compensate for such loss.
How did you get involved with cryptocurrencies and their allied technologies?
We wanted to offer litigation finance on the blockchain to democratize this asset class.
We wanted to make sure that any investors, for as little as 0,1 USD could invest in us and gain exposure to this fantastic asset class.
Blockchain technology allows us to do that very cheaply and very efficiently.
What are the benefits of listing the $wLITI token on different exchanges?
We require all $LITI holders to submit KYC information in order to be eligible for dividend payouts. $wLITI, on the other hand, has no KYC requirements, and can be traded freely on exchanges.
This allows $LITI holders to freely cash out whenever they want to, by wrapping their tokens and selling on an exchange.
Conversely, $wLITI holders can trade in to gain ownership of our equity token and gain rewards.
What are the mechanisms of settlement once a case is successful?
Once a case is won, we will need to collect the award.
This will be done by subsequent legal actions especially if the other party refuses to pay.
What are the mechanics of pricing of the $LITI token considering the fact that so many variables could be affecting this token at any given time?
Pricing of $LITI is directly linked to the $wLITI.
Usually the pricing should be in line with our assets under management.
Currently we are trading at 3 times lower than the value of the assets we have under management.
Are we seeing a dramatic shift from traditional finance towards cryptocurrencies? What are your thoughts on this?
Cryptocurrencies are definitely entering popular awareness now and becoming a part of the zeitgeist of our time.
However, we are still in the early stages of the movement, and we have a long way to go.
On the other hand, blockchain technology has massive potential and can be implemented very quickly in a million innovative ways.
I think that once people start to realize they can use blockchain technology in their daily lives, we will see an explosion in interest in cryptocurrencies as well and the finance industry will follow suit.
What are the benefits of digitizing and tokenizing litigation finance?
By tokenizing shares in our company, we offer a way to reward our supporters for investing in our success.
This business model could be applied to almost any kind of business, and I predict we will see more of this in the future.
Pertaining to litigation finance, however, this is a very big deal.
The investment class we are targeting is one of the most elite, restrictive, and profitable in the industry — it’s an investment strategy that regular people have never before had a chance to participate in — and we’re making it entirely available for everybody and anybody that wants to try it out.
So in this case, tokenizing shares of our litigation finance company disrupts the industry quite significantly.
Please, can you tell us more about the Liti Capital team?
Our CIO, David Kay, has over a decade of experience as founding partner and portfolio manager of a billion-dollar private equity fund in the litigation financing space, and a track record of monetizing hundreds of millions of US dollars in court awards.
His highest-profile litigation asset scored a record-setting international arbitration award of more than USD 1 billion in cash and securities.
I am CEO, and I’m also Head Director of Athena Intelligence, one of the world’s most sought-after intelligence-gathering firms specialized in identifying recoverable assets.
I head up the investigation, due diligence, and case selection at Liti Capital.
Speaking about smart contracts, what roles do you think smart contracts will play in the legal space ten to twenty years from now? Will they replace lawyers? What are your thoughts on this?
I don’t see the legal profession being replaced by smart contracts, but certain procedures will probably change.
It might even be possible to replace the offline brick-and-mortar courthouse by submitting all testimonies and evidence via smart contract.
But ultimately, the industry will still require real people to help argue and arbitrate each case.
Do you have any secrets you want to tell us? Care to spill the beans?
If we told you, it would not be a secret anymore 😉
If you had three wishes and a Genie that could make them come true, what would they be for Liti Capital?
I have very high confidence in Liti Capital’s investment team, so I’m not at all worried about the profitability of our case portfolio.
David Kay, our CIO, has secured over USD 1 billion in profits over the course of his career in litigation financing. However, litigation funding is most often used for big, commercial cases which may take years to come to a final agreement or arbitration.
My biggest hope is that the first few cases we invest in come to swift resolutions, so that our investors can see the profits roll in with their own eyes.
This would be a best-case scenario that would prove the applicability of litigation financing as an investment class for the masses.