New ICO Form

The Avalanche project has announced the product launch, which will allow legal cases to be funded through the purchase of tokens. Such an investment will pay off if the outcome of the process is positive. Otherwise, the investment may be lost completely.

This blockchain project has announced a first-of-its-kind Initial Litigation Offering (ILO). It is a form of fundraising through the sale of tokens. The raised money will be used to finance the costs of litigation. Investors provide capital to the party involved in the litigation and can claim a share of the amount raised if the result is positive. But if the outcome is negative, ILO participants bear the risk of losing their investment.

The project will organize a fundraising drive through ILO in the first quarter of 2021 to support California-based industrial hemp firm Apothio LLC. In October 2019, US government authorities destroyed 500 acres of cultivated cannabis that belonged to the company. Its representatives are sure that this was done wrongfully.

Avalanche and Republic Advisory Services are now developing regulatory documents. These will ensure the issuance of tokens within the ILO and their further circulation on the secondary market.

There are specialized litigation finance companies. And this is quite popular, especially in jurisdictions where litigation costs are high. Lawyers alone are not enough for a successful outcome of such a dispute. Experts from different fields are required, and the costs of travel, communication, meetings can exceed millions of dollars. However, the result in case of victory is always impressive.

The payments can be as high as hundreds of millions. Clients usually cannot afford to pay a lawyer, so they settle for “success fees”. And lawyers do not always manage to win such cases, even with the help of borrowed funds from banks. This is why there is a new financial product.

This form of investment has a high risk. The difficulty for ordinary users lies in assessing the prospects of litigation and the risks associated with the outcome of litigation. In any legal case, there are enough non-obvious traps that can affect the outcome. The project does not offer investors tools to help them adequately assess investment risks. It could be considered high-risk for the average investor.

On the other hand, investing is always a high-risk activity. If you compare this product with other high-yield products, it is no more risky. The degree of predictability can be quite high. Statistics play a big role here. In the US, more than 90% of legal cases do not go to court but end up in an amicable settlement. At this stage, the payouts are not as huge as in the case of winning in court, but the costs are considerably lower as well. So, financiers develop algorithms for the most winning cases, the most successful firms, even. On the basis of this, assumptions are made.

Anyway, it is an interesting idea that could increase access to justice, as it will be easier to get money to fund processes.