Litigation & Arbitration,
Technology
Mar. 22, 2023
The allure and risks of blockchain-enabled litigation finance
Imagine being able to log into an app on your smartphone to buy and sell different litigation tokens on an unregulated, decentralized exchange the way that investors can day-trade in stocks. Investors could also pursue more complex strategies, with defendants buying litigation tokens to hedge risk, and investors short-selling tokens as part of an investment strategy. A "cryptofied" approach to funding is alluring but poses significant risks to investors and litigants.
The advent of blockchain technology has enabled developers to reimagine an array of traditional financial products - from currency exchanges to fractional banking and collateralized lending. And now, not surprisingly, we are seeing some early experimentation with "crypto-powered" litigation finance, offering a crowdfunding model for retail investors to take up a stake in the outcome of commercial litigation. This article will explore how blockchain-enabled litigation ...
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